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?
3 replies on “Forecasting Folly:Arshiya International”
check if kotak is the NBFC routing funds to /out-of Arshiya. By the way one of their research reports was so badly drafted that it looked as a copy /paste from something readymade that was provided to them
I have started checking your website as frequently now econmictimes and rediff. I really like the way u are sharing the good reads everyday. Nice work. And yes, about Kotak and other securities who do all this sham of research reports, these all high paid analysts are all just trying to do some nonsense work in excel sheets and forecasting without checking deep enough any ground realities and trying to just justify their existence in their jobs with some crap complex reports. Never take any on face value. Everyone’s as clueless as the second person.
Thanks for your kind words of appreciation !