Namaste!
Muthoot Finance is one of my favourite stocks in the finance sector. The formulae I use to calculate intrinsic value suggests this stock, whereas it somewhat fails in the valuation of Bajaj Finance, SBI Cards, etc.
It is trading at a PE (Price to earnings ratio) of 11.62, whereas Bajaj Finance is 51.29 and SBI Cards is 45.53.
In most cases, the lower PE is better. The intrinsic value stands around Rs 3000, assuming growth to be 17.2% YoY and 6.1% Indian treasury yields.
The reasons to buy this stock:-
1. Low PE and intrinsic value.
2. 1.75% Dividend Yields.
3. >20% correction in stock price.
Q: What price should I buy?
A: The current price of Rs 1144 is a good price.
Please do not invest more than 10% of your capital. I suggest many stocks, but it is your responsibility to choose your favourite ones.
Disclaimer: The analysis I have shared is based on my understanding and experience in the markets. Investment does not guarantee a fixed return due to volatile nature of markets and may result in a loss. Please do your analysis and/or consult your financial advisor before investing.
Muthoot Finance is one of my favourite stocks in the finance sector. The formulae I use to calculate intrinsic value suggests this stock, whereas it somewhat fails in the valuation of Bajaj Finance, SBI Cards, etc.
It is trading at a PE (Price to earnings ratio) of 11.62, whereas Bajaj Finance is 51.29 and SBI Cards is 45.53.
In most cases, the lower PE is better. The intrinsic value stands around Rs 3000, assuming growth to be 17.2% YoY and 6.1% Indian treasury yields.
The reasons to buy this stock:-
1. Low PE and intrinsic value.
2. 1.75% Dividend Yields.
3. >20% correction in stock price.
Q: What price should I buy?
A: The current price of Rs 1144 is a good price.
Please do not invest more than 10% of your capital. I suggest many stocks, but it is your responsibility to choose your favourite ones.
Disclaimer: The analysis I have shared is based on my understanding and experience in the markets. Investment does not guarantee a fixed return due to volatile nature of markets and may result in a loss. Please do your analysis and/or consult your financial advisor before investing.
Comment:
The stock is getting ready for a breakout because it has tested the resistance many many times.
Comment:
There are other good investment opportunities, so the stock might be sold at Rs 1159. The business of Muthoot is stable and low risk, so as the stock prices (less volatile on daily charts). I will look for other high reward potential stocks.
Comment:
There is an add more opportunity at Rs 760 levels because it has a strong weekly trendline. But, if you consider this and add more shares (of similar amount in Rs), you're taking an extra risk by adding to your loss making position. So, to compensate this risk, you should sell (book profits) at not less than Rs 1500.
Comment:
It is consolidating near resistance level, so Rs 1214 should be a better price as compared to Rs 1159.
Comment:
I expect anyone who is reading my writings to know that there is nothing "certain" in the markets. Neither the %gain on stock nor "out-performance" or "under-performance". There is a risk and opportunity cost involved in both, buying and selling. Selling at any price can often result in "opportunity loss" when the stock moves higher and higher. Human psychology is a culprit here. For e.g. I post any stock which seems undervalued or overvalued to me on tradingview. When anyone makes money on that, they wont appreciate me "a single word". But when they lose or it results in opportunity loss, they are bound to blame me. I don't criticize any person, because I know their psychology has defeated them. At last, there is nothing like "easy money" in the markets. The survival of the fittest holds absolutely true here.
Comment:
I have to accept my one mistake, so that I can try not to commit it next time. I told to buy at Rs 1144 and sell at Rs 1159. In India anyone could've earned around 4.5% on savings ac or 9% on fixed deposits at best annually, "without taking the risk". But in Muthootfin stock case, you took the risk but "jumped out" without taking the reward. Which is a wrong decision financially, because greater risk should be compensated by greater reward. So, the best price to actually sell was 18% above the buy price (double the alternative avenue). It was Rs 1349.92. You see, these small mistakes add up overtime and become considerable% of return.