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?
4 replies on “Forecasting Folly:Marg Ltd”
please refer your earlier mail in value pick for geodesic. What kind of target one should look for and by what time frame please…
The very purpose of forecasting folly series is to highlight the folly of setting targets for stocks etc.As regards Geodesic, the company appears deeply undervalued from a valuation perspective.Difficult to predict the time frame when this valuation gap will close.Would encourage you to do your own research before buying/selling any stocks.
Thanks
Looking back now when Marg is trading at Rs 10 it appears a even bigger folly. However I would like to know how we should value asset based companies when they are facing trouble. For instance in the present case Marg has a mkt cap of 37cr with a debt of close to 3000 cr. However it has a running port, a 60% competed mall, swarnabhoomi sez. All in all 1800 acres of land plus a 28 MTPA port. Does it now qualify to be a potential multibagger if one were to invest in it for the next 5yrs by when most of its troubles wud be over as most of its debt is getting restructured through Edelweiss Arc ??