Now I would like to discuss something related to valuation of stocks.
Jay’s model for analyzing a scrip:
He follows DCF(Discount cash Flow) model for analyzing a scrip. He also asked investors to look at Return over capital Employed(ROE). Rising interest rate will eat into the bottom line of the company. Jay if you are reading this, kindly tell us what impact rising interest rate will have on debt free companies 😉
- Do not believe in what a fund manager or broker says. Jay further adds that gone are those of doubling your money in a month. Anybody who directly talks about BUYING or SELLING a particular stock has vested interest in it.
- Kotak Mahindra has researched 1300 companies’ annual results available till 18-05-2006 and has found that those companies have grown by 23.5% YoY and expect to grow atleast 17.7% next year.
- Forward P/Es of emerging markets are China – 25.4% , BSE Sensex 18.2%, Russia 14.7%, Nifty 16.2%, Hong Kong 12.3%, Korea – 11.2% and Brazil 10.7% at the end of May-2006.
- Currently June 14th, 2006 forward P/E of Sensex is 15.5 for 06-07 and this makes India look attractive again.
- Jay wants all the investors to follow some disciplined investment, like SIP or STPs by mutual funds or research on your own and hold those stocks for long term. He specifically asked investors as to why they were chasing Unitech constructions and why they are now dumping it as if their is no tomorrow ?
Finally, Jay concluded by saying in his research of Real Estate, Gold & Stock Market over a period of 10 years, Stocks have always yielded the best and will continue to outperform the rest of the investable instruments. Invest, Invest, Invest on Dalal Street. Now or Never.