CRISIL’s latest research report endorsed Rakesh Jhunjhunwala asction

by khalid on 08/02/2011 · 0 comments

Indian Warren Buffett , billionaire investor Rakesh Jhunjhunwala, bought shares of Visaka Industries in August 2010. Since then everybody was waiting to see the stock high-rocketed as it was picked buy Rakesh Jhunjhunwala. But all the guys disappointed as the stock has only been going downhill and lost 23% at the CMP of Rs. 104. So this time magic of Rakesh Jhujhunwala was not clicking.

In Q1 FY11, Visaka Industries had already shown a weakening trend. Visaka Industries continued this in Q2 FY11. Visaka Industries‘ sales increased from Rs. 120 crores in Q2 FY10 to Rs. 134 crores in Q2 FY11. Visaka Industries Net Profit fell 37% from Rs. 10.78 crores to Rs. 6.77 crores.

So most of us thought that our legendry great Rakesh Jhunjhunwala has failed this time but to our surprise rating agency CRISIL has come to Rakesh Jhunjhunwala‘s rescue and issued a research report dated 18th Jan 2011 in which CRISIL has assigned Visaka Industries a fundamental grade of 3/5 and a valuation grade of 5/5. So again our great Rakesh Jhunjhunwala has proved it again as CRISIL is seeing a “strong upside” from the current level of Rs. 104 in this Visaka Industries stock.

Valuation estimated by CRISIL :- CRISIL Equities has used the discounted cash flow method to value Visaka and arrived at a fair value of Rs 151 per share. The stock is currently trading at Rs 104 per share. The fair value implies P/E multiples of 4.7x FY12 EPS of Rs 31.9 and 4.2x FY13 EPS of Rs 35.6. We initiate coverage on Visaka with a valuation grade of ‘5/5’.”

We know that the great Rakesh Jhunjhunwala does not need any endorsement of his stock pick from CRISIL but lesser mortals would certainly be encouraged by the fact that their investment in Visaka Industries has a good chance of earning a reasonable return if not of becoming a multi-bagger!

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