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Monday, April 14, 2008

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Once again the RIL gr stocks (both brothers) showed typical character and screwed for the first time all the short sellers who were taking credit by shorting. One day was sufficient to wipe out 10 days gains. At the same time B gr stocks have shown great character.

I have reason to believe that B gr will outperform due to lack of ownership and fresh buying from scattered investors as well as vested operators. HEG has great value. Promoters have issued shares at Rs 450 or around to themselves through preferential route and they are de-merging their 100% subsidiary where power story is there. As per the last FII buying I had seen pre crash they had acquired HEG till Rs 600. In current scenario you can’t expect a better value than this. In similar circumstances I had recommended Kemrock at Rs 100 and Rs 160 level which then went on to Rs 1000. Now I bet on HEG.

Another stock which merits attention is Gremach Infrastructure. It has huge coal mines. Its associate concern Austral Coke is coming out with IPO for 10 mn shares to fund its 1.5 lakh ton green field coke project at Sindhudurg. It has 1.75 lac ton low ash metallurgical coke at Kutch. Sources also point it out that it has signed agreement with Sterlite gr for its entire capacity. It is also seen that co has reported Rs 16 crs PBT on equity of Rs 15 crs for Q3 which means the stock is going for song. Its 52 week high was Rs 510 and list of shareholders include Merrill and Tempelton. As usual the stock price was corrected because of huge FII holding but now at this price there is genuine value. Co has also announced in FEB to convert FCCB at Rs 376 though the CMP is just Rs 118. This is called hidden gem and timing to pick such stocks at such ability can give you returns which you can only dream.

Given this what is need to buy A gr share. I would sell by NMDC at 16000 and buy Gremach which has potential to rise 10 times whereas I can’t expect NMDC to touch Rs 1.6 lac. Coke is becoming costlier and costlier. If Jesywal can trade at 500 crs market cap why can’t this co to trade at Rs 500 crs market cap…?

Coming back to A gr if you have capacity to buy and hold for next one month and also to digest the volatility of 10% then only it is worth having look at F & O. Though bulls are trying to make the lost grounds stock specific the bears are not silent. Nifty where you do not require any underlying papers can be sold naked by a bear which is just not possible in B gr shares. Man is the only animal who causes pain to others with no other object than wanting to do so.

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