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Divi's Lab

Discussion in 'Portfolio Updates' started by shabbir, Jul 16, 2017.

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  1. shabbir

    shabbir Administrator Staff Member

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    On 10th July 2017, I completely booked out of Britannia Industries and Jubilant Foodworks and it is because I saw very stretched valuations in those two stocks in my portfolio and bottom formation in Pharma is immenent. I expect much more upside in Pharma stocks than in Britannia Industries and Jubilant Foodworks for next year or so.

    This is not a stock recommendation and just sharing the information that is available in the public domain.

    I selected Divi's Lab to be part of my portfolio because I wanted a stock that had a very sharp fall in price for an USFDA issue and not a very slow and over time kind of grind like in Sun Pharma or Lupin.

    Divi's Lab is major supplier of some of the key APIs and so even a Vizag Unit gets USFDA alert but then some drugs from the same unit is allowed because they are unique supplier of such APIs. Clearly a unique business to consider.

    Divis.png

    As per the annual report at BSE only 33% of their total business in US in 2016 and it has come down from close to 45% in 2014. And if you see the correction in price, it is more than 50% from a high of 1380 to a low of 533.

    This gives me much confidence to jump into this stock as soon as I saw the bottom for the stock is formed and it has formed a good support in the range of 550 to 650 levels.
     

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  2. madhuvarsha

    madhuvarsha Member

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    Will it make W curve?
     
  3. shabbir

    shabbir Administrator Staff Member

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    Let it make instead of hoping it will make.
     
  4. ganeshc89

    ganeshc89 Builder

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    In short Divis lab is Golden goose.
    Don't think to much you will be confused.
     
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  5. madhuvarsha

    madhuvarsha Member

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    I see all the values are negative!! Why the price will toch again 1200+?

    https://www.valueresearchonline.com/stocks/snapshot.asp?code=7301

    Interim Growth Ratios (%)

    QoQ YoY YTD
    Quarterly

    Revenue -23.01 -19.27 -25.57
    Operating Profit -28.32 -34.65 -34.10
    Net Profit -31.91 -41.51 -45.17
    EPS -31.91 -41.51 -45.17
    TTM
    Revenue -4.85 -2.35 3.10
    Operating Profit -9.62 -13.43 -8.57
    Net Profit -11.89 -20.51 -16.46
    EPS -11.89 -20.51 -16.46
     
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  6. ganeshc89

    ganeshc89 Builder

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    Numbers are variable and can be change.
    First of all this growth ratios are temporary and will recover Pharma sectors have very low since last year because of the USFDA issues and certain kind of global turbulence.
    Now
    1.) This Company is debt free so any one can invest for long term without any stress because debt free companies are best to invest.
    2.) Solvency Ratio is alt man z score is 14.36 which indicate less threat to the business.
    You can Check the Altman Z score of the Lupin, Glenmark,Sun pharma,Aurbindo Pharma,wockhardt,pfizer and dr. reddy lab top is Divis Lab and it will clear your half of your doubts.
    3.) check the value research online properly and compare with others. Most valuable is divis lab. because
    • PEG is 0.94 which is excellent.
    • Average return on equity 10Years: 28.25
    • Sales growth 10Years: 20
    • Average dividend payout 3years: 29
    This Company is financially stable company with good cash flow.

    So if Nilkamal can move from 101 to 2000 rs within three years so i dont think so it will be difficult for divis lab to to touch 1200 rs level.


    Thanks.
     
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  7. madhuvarsha

    madhuvarsha Member

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  8. shabbir

    shabbir Administrator Staff Member

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  9. nirajshah

    nirajshah Champion

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  10. ganeshc89

    ganeshc89 Builder

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    Divis and future enterprise Rock.
     
  11. shabbir

    shabbir Administrator Staff Member

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    Yes it did. Handsome gains but I think I will like to keep holding this for a long term (very long term) much like Pidilite.
     
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  12. nirajshah

    nirajshah Champion

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  13. shabbir

    shabbir Administrator Staff Member

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  14. nirajshah

    nirajshah Champion

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  15. mcsaxena

    mcsaxena Member

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  16. shabbir

    shabbir Administrator Staff Member

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    As of now I am not too concerned about the stock price and is more interested in seeing 2 to 3 quarterly results before I check the price. 990 is a good price for someone who has a trading view to book profits but my view is investment for the long term.
    I don't think so. One should either wait for a dip or consolidation for re-enter. Short term view and a 30% rise can be good enough levels to book profit. For long term investors, one can wait for few quarterly results before taking any decision.
     
  17. nirajshah

    nirajshah Champion

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    Divi's rocking yet again @shabbir. You are simply genius in picking the right stock at the right price. Tracking your portfolio for last 1 year and everyone of the stock has performed well and some of them has become double as well. Do you expect similar results for Divis?
     
  18. madhuvarsha

    madhuvarsha Member

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    I hope it will break the level of 1300 soon !!
     
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  19. shabbir

    shabbir Administrator Staff Member

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    Yes it has been a good pick for me but I will re-iterate what I said earlier which is,
     
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  20. shabbir

    shabbir Administrator Staff Member

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    Expected in next 6 to 8 months.