Looking at the quick success achieved by Ajanta Pharma and Thangamayil Jewellery, it seems that making money is so easy in Indian Markets, but it isn't.
They were able to achieve the early success because they were able to post numbers beyond expectations most of the times.
In small caps, as they say, posting numbers which are just as expected doesn't light up the eyes of big investors who actually has the capacity to take the stock to new levels.
For eg., We saw in Ajanta Pharma that, it used to make nearly 10000 volumes a day, on a consistent basis. But suddenly, from 23rd Jan (i.e. the day when they declared results), I haven't seen the stock doing volumes even less than 1.5 lakhs in a day. So, was there a sudden change in fundamentals of the company?
The answer is No. It is just that, big institutes, suddenly fell in love with the company's fundamentals and they took the stock to new levels. And this could happen any day with any company. Not just the day when they post strong numbers.
If we go back and say that Ajanta Pharma posted a strong Q3 numbers due to which the stock went up, then let me remind all, that this time, Ajanta Pharma's revenues went up by 40% YoY and net profits went up 75% YoY, whereas if you check Q2 results, their revenues again went up by 40% and net profit actually went up by 85%. But still the stock got hammered after Q2 results, it came down from 447 to 358 levels and this time, it went up from 409 to 670 levels. So, this is something, I feel, one cannot predict, but we atleast try to be sure, that it will happen some day.
They were able to achieve the early success because they were able to post numbers beyond expectations most of the times.
In small caps, as they say, posting numbers which are just as expected doesn't light up the eyes of big investors who actually has the capacity to take the stock to new levels.
For eg., We saw in Ajanta Pharma that, it used to make nearly 10000 volumes a day, on a consistent basis. But suddenly, from 23rd Jan (i.e. the day when they declared results), I haven't seen the stock doing volumes even less than 1.5 lakhs in a day. So, was there a sudden change in fundamentals of the company?
The answer is No. It is just that, big institutes, suddenly fell in love with the company's fundamentals and they took the stock to new levels. And this could happen any day with any company. Not just the day when they post strong numbers.
If we go back and say that Ajanta Pharma posted a strong Q3 numbers due to which the stock went up, then let me remind all, that this time, Ajanta Pharma's revenues went up by 40% YoY and net profits went up 75% YoY, whereas if you check Q2 results, their revenues again went up by 40% and net profit actually went up by 85%. But still the stock got hammered after Q2 results, it came down from 447 to 358 levels and this time, it went up from 409 to 670 levels. So, this is something, I feel, one cannot predict, but we atleast try to be sure, that it will happen some day.
1) Granules India Ltd:
The company, right now is going through the toughest time of their career in stock markets, even after posting a record revenues of 195 Crs this quarter. The reason being, people expected it to post numbers which included the revenues from the capacity expansion by the company in this quarter. The only option left for management to get back the faith of investors (atleast those same investors, who took the stock from 55 to 230 levels within 9 months), is to make some positive announcements. One can be further promoter buying, for the remaining 0.5% allowed for the year, one can be through a notice suggesting the completion of capacity expansion and making sure that they contribute to sales for this quarter, and last one would be to wait and watch this quarter results directly in April.
Somehow, the company needs to get out of the tough times.
The company, right now is going through the toughest time of their career in stock markets, even after posting a record revenues of 195 Crs this quarter. The reason being, people expected it to post numbers which included the revenues from the capacity expansion by the company in this quarter. The only option left for management to get back the faith of investors (atleast those same investors, who took the stock from 55 to 230 levels within 9 months), is to make some positive announcements. One can be further promoter buying, for the remaining 0.5% allowed for the year, one can be through a notice suggesting the completion of capacity expansion and making sure that they contribute to sales for this quarter, and last one would be to wait and watch this quarter results directly in April.
Somehow, the company needs to get out of the tough times.
2) Cravatex Ltd:
The company posted Q3 numbers on 8th Feb, and not surprisingly, they were again below expectations. The revenues went down by 10% YoY and net profit took a severe hit, and was down almost 58% YoY.
They would find it difficult to get back to heavy profits, unless the rupee gets stronger. Till then, they should find ways to grow their revenues more and more.
The updated website looks cool and promising, but it is definitely going to be tough for them, as the investors had lots of expectations from the company, just a year back, when it made a high of 799 Rs around April, and that was after the company provided bonus shares 1:1
Let's see, if the company is able to weather this storm and get back the confidence of investors in future.I have found a quote for both the companies and it says:
"Prosperity is a great teacher; adversity is a greater. Possession pampers the mind; privation trains and strengthens it"
The company posted Q3 numbers on 8th Feb, and not surprisingly, they were again below expectations. The revenues went down by 10% YoY and net profit took a severe hit, and was down almost 58% YoY.
They would find it difficult to get back to heavy profits, unless the rupee gets stronger. Till then, they should find ways to grow their revenues more and more.
The updated website looks cool and promising, but it is definitely going to be tough for them, as the investors had lots of expectations from the company, just a year back, when it made a high of 799 Rs around April, and that was after the company provided bonus shares 1:1
Let's see, if the company is able to weather this storm and get back the confidence of investors in future.I have found a quote for both the companies and it says:
"Prosperity is a great teacher; adversity is a greater. Possession pampers the mind; privation trains and strengthens it"
