In the earlier post we had outlined the fact that the FMCG/CONSUMPTION space is by far the most attractive area for stock investment; we had also realised that most good scrips in this space have already run up a lot often trading at 40+ PE multiples on TTM (TrailingTwelve Month) basis thus making it important for retail investors to analyse the possible entry price zones for these scrips for profitable long term investment. In this post we shall aim to find the BEST POSSIBLE ENTRY PRICE STRATEGY for TITAN.
All of us are amply aware of the excellent results that TITAN has been delivering quarter after quarter so I won't dwell too much on the Results part. We all know that TITAN is a definite BUY but we will try and find the best entry price for the scrip, as I mentioned earlier. When we analyse the Market performance of TITAN we see that the CMP is 206 (52 wk high 237, 52 wk low 113 on the BSE). The current PE is 37 (TTM). Now if we analyse the Price performance over the last two years we observe that the Stock HAS NEVER GONE BELOW ITS 200 DMA (SMA basis ie Simple Moving Average)in the last two years in terms of Closing Price!!! It only TOUCHED the 200 DMA twice during the last 2 years (once on 9/2/2011 at 154 and then on 18/8/2011 at 203) which is phenomenal!!!!
So the short point is that we would normally expect the 200 DMA (which is currently 194) to hold ; This is obviously what a simple analysis of the 2 yr Charts as above tells us. However keeping the current turmoil in mind we shall , as a matter of abundant caution , also add some Fundamental viewpoint into the Technicals for a holistic view. TITAN has as we all know delivered phenomenal results for the past year as well as Q1 FY 2011-12. Its Net Profit grew over 70% last Financial Year and the Company has expressed confidence of maintaining a 30% CAGR topline and bottom line growth over the next couple of years. However the Company has also given a heads up regarding possible picing pressures in the jewellery segment in the current Quarter.
Therefore assuming a 30% CAGR as guided by the Company TITAN is trading at about 25 PE FY2011-12 basis. At CMP of 206, the PE (TTM) is about 37 and the PE (TTM) at current 200 DMA of 194 is about 35. Therefore keeping both Technicals and Fundamentals in mind, in my opinion it would be ultra safe to assume a PE 30 (TTM) as the optimum price entry PE. This corresponds to a Price of about Rs 166 as a best entry price on a most conservative basis. However it is very much possible that we may NEVER get this entry price of 166, so it is better to make the first purchase about 10-15% higher ie around 185 -195 levels and then average out downwards uptil 166, on bad days, in accordance with ones appetite.
Thus, in my opinion, techno-fundamentally speaking, 185-195 IS A GOOD FIRST ENTRY PRICE RANGE FOR TITAN , with a BEST PRICE being around 170 levels, for long term investors.
All of us are amply aware of the excellent results that TITAN has been delivering quarter after quarter so I won't dwell too much on the Results part. We all know that TITAN is a definite BUY but we will try and find the best entry price for the scrip, as I mentioned earlier. When we analyse the Market performance of TITAN we see that the CMP is 206 (52 wk high 237, 52 wk low 113 on the BSE). The current PE is 37 (TTM). Now if we analyse the Price performance over the last two years we observe that the Stock HAS NEVER GONE BELOW ITS 200 DMA (SMA basis ie Simple Moving Average)in the last two years in terms of Closing Price!!! It only TOUCHED the 200 DMA twice during the last 2 years (once on 9/2/2011 at 154 and then on 18/8/2011 at 203) which is phenomenal!!!!
So the short point is that we would normally expect the 200 DMA (which is currently 194) to hold ; This is obviously what a simple analysis of the 2 yr Charts as above tells us. However keeping the current turmoil in mind we shall , as a matter of abundant caution , also add some Fundamental viewpoint into the Technicals for a holistic view. TITAN has as we all know delivered phenomenal results for the past year as well as Q1 FY 2011-12. Its Net Profit grew over 70% last Financial Year and the Company has expressed confidence of maintaining a 30% CAGR topline and bottom line growth over the next couple of years. However the Company has also given a heads up regarding possible picing pressures in the jewellery segment in the current Quarter.
Therefore assuming a 30% CAGR as guided by the Company TITAN is trading at about 25 PE FY2011-12 basis. At CMP of 206, the PE (TTM) is about 37 and the PE (TTM) at current 200 DMA of 194 is about 35. Therefore keeping both Technicals and Fundamentals in mind, in my opinion it would be ultra safe to assume a PE 30 (TTM) as the optimum price entry PE. This corresponds to a Price of about Rs 166 as a best entry price on a most conservative basis. However it is very much possible that we may NEVER get this entry price of 166, so it is better to make the first purchase about 10-15% higher ie around 185 -195 levels and then average out downwards uptil 166, on bad days, in accordance with ones appetite.
Thus, in my opinion, techno-fundamentally speaking, 185-195 IS A GOOD FIRST ENTRY PRICE RANGE FOR TITAN , with a BEST PRICE being around 170 levels, for long term investors.
Fantastic!!! 4 mths down the line. Could you explain samr for CRISIL & Karur Vysya Bank
ReplyDeleteThanks, Detailed posts on CRISIL and KVB are now available. All the best.
ReplyDelete