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ForecastingFolly

Forecasting Folly:Arshiya International

This post is in continuation of my Forecasting Folly series (see here)

On 29th Dec, 2012, Dalal Street’s finest at Kotak Securities came out with their equity outlook for 2013.

As is their wont, they recommended 5 stocks for 2013.

And guess what, one of the stocks recommended was Arshiya International.The then prevailing price was Rs.118, a target price of Rs.188 was assigned to the stock.

A short two weeks later, the stock has collapsed due to allegations of corporate governance issues.Now it is quoting at 77.0 , one third of the then CMP and looks like it is set to go down even further.

Kotak’s response to this is typical of our brokerages here ; it has suspended coverage of the stock !!A note to clients  says

“The stock has declined by 40 percent over the last 12 months, largely driven by slowing economic growth which has led to less than estimated growth in segments like FTWZ/Container rail and high debt position. Given the above and lack of clarity on the alleged wrongdoing by the management we are suspending coverage on the stock till clarity emerges,”

This is probably a record in the Indian equity markets where a buy recommendation has collapsed in a space of two weeks !!

Forecasting folly, anyone?

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Video

Why combing a long and short does not mean you are hedged

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Stock

The fall of Arshiya International

In an earlier post, I had briefly commented on Arshiya International.

Today again Arshiya has hit the lower circuit.In an article in Economic Times, employees of the company had alleged financial irregularities in the company.

“The promoters have misguided investors, stakeholders by painting a rosy picture so far, while the company is hollow – it is a mini Satyam,” said one of the sacked employees.”

 

Some bloggers had also wondered

how  is that  Arshiya with a networth of @ Rs 550 crs and ROCE of @ 10% and a Market Cap of under Rs 800 crs  and a relatively high Debt Equity is executing Warehousing Projects of  Thousands of Crs.

 

Only time will tell if Arshiya will turn out to be like DCHL.In the meantime, the ill-fated investors will have to grin and bear the losses.

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Bond Investors search everywhere for yield

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Links

Linkfest:Jan 10, 2013

Some stuff I am reading today morning:

LIC hikes Infosys stake by over 2% (BusinessLine)

Why it is a good time to lock your money in fixed deposits (Firstpost)

No takers for Capt.Gopinath’s Simply Fly plan (ET)

SEBI to introduce safety net for IPO investors (Mint)

Will course correction help Fortis Healthcare? (BS)

No friendship with barbarians (MediaCrooks)

Avoid paying taxes the Warren Buffett way (SeekingAlpha)

Five Brutal Years teach investors to sit tight (BusinessWeek)

The future according to Google’s Larry Page (CNNMoney)

A word about portfolio rebalancing (BigPicture)