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ForecastingFolly

Forecasting Folly:Cebbco

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

The forecasting folly case of Cebbco was pointed out to me by reader Puneet Pattar.

Cebbco was a darling of many brokerage firms who recommended it with various price targets .An article detailing their shenanigans can be found here

But what I find interesting is that well known investor Gul Tekchandani recommended this stock on Oct 31, 2012.In an interview to ET, he was asked:

Give me a stock idea where you are putting your money to work, where you are confident of a 15%-20% appreciation in next 12 months, next 18 months?

 

This should be taken as a disclosure as well; I have just about bought this Commercial Body Builders which is at about Rs 90. And I am always buying and selling the top line companies, but this is a new addition to the portfolio. I expect that this company will grow at 50% per annum and will give a smart returns, and does not require any money at least for a couple of years so that should help.

 

We all know what happened after that.Cebbco crashed spectacularly and is quoting around 30 Rs !

Forecasting folly, anyone?

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ForecastingFolly

Forecasting Folly:HDIL

This post is in continuation of my forecasting folly series (see here)

On March 29, 2010, Angel Broking put out a Buy Call on HDIL with a target price of Rs.356.The then prevailing price was around Rs.286, implying a gain of around 24%

Around one year later, on Feb 11, 2011, HDIL is quoting around 137.45 Rs –around 38% of the original target price ! This does not deter the good folks at Angel Broking.They issue out another Buy Call on HDIL, this time with a price target of Rs.243

Around six months later, on Aug 16,2012, HDIL is quoting around 83.9 Rs-around 40% of the revised target price ! Dalal Street’s finest at Angel Broking remain undeterred.They heroically maintain their Buy Call, this time revising the price target to Rs. 115

Now, you dear reader, know where this is heading, right?

Around six months later, on March 25, 2013, HDIL is quoting around Rs.46.6. This is around 40% of the revised revised target price !

Forecasting Folly, anyone?

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ForecastingFolly

Forecasting Folly:Marg Ltd

This post is in continuation of my forecasting folly series (see here)

Marg Ltd is a well known Chennai based infrastructure development company.

In its April 5, 2011 research report, Networth Stock broking recommended a buy on Marg with a price target of Rs.256.The then prevailing price was Rs.126 per share, indicating a potential upside of 103%

As we have seen in other instances, this buy call turned out to be a kiss of death for the stock and the stock started falling thereon.

This was the cue for Dalal Street’s finest at Edelweiss to jump in.In its report dated Sept 21, 2011,Edelweiss maintained a buy target on Marg with a price target of Rs.272. The then prevailing price was around Rs.92 per share, indicating a potential upside of around 300%

The stock price’s negative spiral did not stop and it fell continuously over the coming months.Yesterday, Marg closed at Rs.24.8. 

This price is 9.6% of the original target set by Networth and 9.1% of the original target set by Edelweiss.

Forecasting folly, anyone?

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ForecastingFolly

Forecasting Folly: Crew B.O.S.

This post is in continuation of my forecasting folly series (see here)

On May 4, 2011, Sunidhi Securities came out with a buy call on Crew B.O.S. with a target price of Rs.145.

Then the prevailing price of the stock was around Rs 104 .So the call indicated an upside of around 40%

That buy call turned out to be the kiss of death for the stock.Over the next two years, the stock slid continuously and is now available for Rs. 10.55 !! (There is no indication online of Sunidhi Securities changing its recommendation during this period)

The current market price is actually 7% of the target price set two years back !!

Forecasting folly, anyone?

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ForecastingFolly

Forecasting Folly:Spanco

This post is in continuation of my forecasting folly series (see here)

I had blogged earlier about Crisil’s forecasting accomplishments (see here).

But this example is quite outrageous in its own right.

On July 28, 2011, Crisil maintained a valuation grade of 5/5 on Spanco and gave it a fair value of Rs.289 per share.Then the prevailing price of Spanco was around 130 Rs.

One year later, on June 04, 2012 , Crisil continued to maintain its valuation grade of 5/5 on Spanco and retained its fair value of Rs.289 per share.Then the prevailing price was Rs.66 per share.

Any investor could have been forgiven for thinking that this is a deal of a lifetime.You have the brilliant minds at Crisil valuing the fair price of a stock around 5x times the market price.

What followed in the next months was a complete collapse in the stock price.Now the stock is trading at 16 Rs !!

Forecasting folly, anyone ?