Its remarkable to see how people get jitters if the stock goes down a few percentage. The difficult part of the money making process in stock market is not to make money but to make huge amount of it. People buy on borrowed conviction and therefore, they lose sleep. Please do not think in days and weeks. Think “atleast” in quarters and years guys. And the worst way to handle the volatility is to sell when the stock goes down and buy when it goes up. You do not make money by buying or selling the stock, real money is made by holding on to those stocks. I have been getting a lot of emails regarding freshtrop, so Lets talk about it right now.
Although the recommended price was around 52rs, let talk about a person who might have bought it at a 52 week high price of 72rs. Now we know the future is great. I told you guys that management is targeting around 50% topline growth (and around 30% topline growth) for next two years. In the AGM also the management confirmed this when they said they are estimating this year’s growth at 140cr and next yr at around 200cr. Given what we have already seen in Q1 (which should be seen YoY), I think they are on the right track. Infact, they hope to do better than what they told me (the bottomline that is). Given that they would become debt-free, the EPS could “atleast” be around 10rs for this year. The person who bought at 72rs is paying just 7 times forward earning for it. A debt-free consumption play where promoters have increased their stake in last couple of years buying for FW PE of 7, do you guys think it’s expensive? If yes, then well, buy FDs, pls do not come to stock market. You may get rich by your income and FDs, but you may never become wealthy because you can never “multiply” your money.
Guys, at 9% FD, it takes 7 yrs for your money to double in absolute terms (and in real terms you actually lose half your money to inflation), and its just double. Stocks, on the other hand, do not just double, they go up 5x,10x,50x and with god’s grace even 100x. But there are times even with such stocks that they are volatile, that’s the nature of real-time information (that you keep on saying on your portfolio tracking tools and TV). Let me ask you, If you invest in house, do you check the prices of your house every few minutes or even days? No, at max we just monitor the news flow and that’s what we should do here. Trust me, if you look at value and not price you will end up making huge amount of money, I mean really huge. A person who paid 72 bucks (i.e. 7PE FW) for a domestic consumption play should know that others are paying 30 PE FW for similar domestic consumption plays. Why are you worried with little downward movement? You should know that what you bought today at 7 PE FW would be bought at 30 PE FW by others (in a few yrs, not days please), and that too on increased earnings (which means multi-fold gains). And that is when you would make huge money.
Guys, we are in a great country in midst of great bull market, don’t let this volatility blur the bigger picture or else you’ll end up losing an opportunity of a lifetime to a smart investor who’s probably happily buying your stocks. I got similar emails when waterbase went from UC to LC and went down from 52-53 to around 43 (I think 20%), look where it is today even after being down by around 25% (from its 52 week high of 98)., its still 50% higher than the 53 levels. So who made money, people who panicked and sold at 50-53 or people who held on to their conviction during that spate of LC? If you want to make money then understand your company and HOLD… HOLD and HOLD. God Bless.