There are quite a few IPO which are now available for subscription in the next one week and they are
a. Eris Life scriences, which is open since 16th and closes on 20th
b. CDSL, which is a depository and subsidiary of BSE opens for subscription ON Monday and closes on 21st.
c. GTPL Hathway Limited is also open in the coming week from 21st to 23rd.
In addition to the above, we have other IPO which are likely to hit the market like
SBI life Insurance
HDFC Life insurance as the Max merger has not gone through
the details of PSU sale are given in the link for you to have a look. There will be also offer for sale of shares in select companies.
Should you Invest in IPO?
A Common question in every one’s mind is, Is it good to invest in IPO?
Is it the right time?
As you all know, the markets are at an all time high with the sensex over 31 k and enough liquidity is there in the market and currently there is no sight of the market coming down drastically or correcting itself. One is thinking twice to invest in the current market. IPOs provide an opportunity for you to invest.
How the IPOs which came earlier have fared?
Look at the image below and see the performance of the various IPO which came about since April 16 and most of them have given decent returns.
How much you need to invest?
Most of the IPOs require anywhere between 14k to 15k per lot and you can investment more in multiples of the minimum lot size.
Who should invest?
Both short term investors and Long term investors can consider investing. Short term investors can look to take listing gains.
Where as long term investors can choose the IPO on fundamental strength and invest.
What happens if the listing price is lower than the IPO price?
It is possible you need to hold and should have the ability to hold. Take IPO like ICICI pru life insurance from the listing price of 335 it went down to 261 and it has bounced back 70% from there and trading around 440
Same is the case with VArun beverages.
Do not borrow money and invest in IPO. You should invest only with your surplus money. Otherwise, on a downturn, you can lose heavily and interest cost on the borrowed amount can be higher.
In case you need any further details do contact me.
Success is never permanent and there is always competition fighting to take your spot. So how does one battle a position that was lost? Looking at the toothpaste wars in the US can give us some lessons.The toothpaste brand “Crest”, owned by Procter & Gamble, was the favourite toothpaste for 40 years in the US since launching in 1955. However, in 1998, Colgate-Palmolive’s “Colgate Total” kicked out Crest from its champion spot.
Game changer delivers leadership position
How did a brand that was #1 for 40 years lose its spot in its market? Colgate-Palmolive had market leadership in more than 170 countries as the toothpaste champion but in the US, it was forced to contend with second place. The story changed in 1998 with the launch of Colgate Total and Crest tumbled from its leading spot. It took Crest almost a decade of fierce competition to regain the #1 position in the US in 2007 and the toothpaste battles continue. The way Crest won back its #1 position holds valuable lessons for us in the fund management and the financial distribution businesses.When Crest was first launched in 1955, Colgate was the market leader in the toothpaste category. In 1960, Crest became the first brand of toothpaste to receive an endorsement from the American Dental Association (ADA) that Crest was shown to be effective in fighting cavities. P&G took the market by storm with the endorsement and was able to dominate the US toothpaste marketover the next several decades with a product that was marketed as having both cosmetic and therapeutic benefits. Till the 1990s, Crest retained its leadership spot in the US market with around a 35% market share, while Colgate had about 20 percent.
Resting on past laurels
Over the years, P&G did not vary the sales pitch or the look of the brand. However, competition did not stay still. Rival toothpaste makers started to concentrate on other aspects of oral care beyond cavities to appeal to consumers – yellowing teeth, sensitive gums and bad breath. Crest meanwhile continued as the cavities fighter toothpaste but its fall was a slow decline. Between 1987 and 1997, Crest’s market share slipped from 39% to 25%.
In 1997, Colgate-Palmolive launched Colgate Total which promised to fight everything – cavities, tartar, plaque, bad breath, and, most importantly, gingivitis. An estimated 100 million Americans suffer from gum disease. Gingivitis is an inflammation of the gums which is usually caused by bacterial infection and can result in symptoms such as bleeding gums. If left untreated, it can lead to more a serious infection known as periodontitis. Gingivitis and periodontitis are major causes of tooth loss in adults. According to dentists, gingivitis can be prevented by consistent and proper oral hygiene.
Colgate Total capitalized on this consumer concern and Colgate Total was marketed as the only toothpaste approved by the Food and Drug Administration to prevent gingivitis, as well as by the American Dental Association to fight plaque and gingivitis. By the end of 1998, Colgate had grabbed 30% of the toothpaste market knocking P&G off its leadership spot in the US.
How did P&G get left behind? Even though P&G had all the technology that competition had exploited for years, the company continued its old approach and focus on what it used to do. The company was not quick to recognize the change in consumer trends and respond accordingly. P&G had a gingivitis fighting toothpaste in testing for at least 6 years but its slow and meticulous culture meant Colgate, with a much smaller research budget, was able to reach the market first.
Flip the game back – and win
Until P&G came up with its cavity fighter, toothpastes were largely marketed around their cosmetic value. For the next 40 years, Crest and Colgate slugged it out on therapeutic values – cavity fighting, gingivitis fighting, bad breath control, toothpastes for sensitive teeth and so on. This was a game that Colgate was playing better than Crest.
What P&G did next was not to find yet another therapeutic utility – but to flip the game back to where it originally started – cosmetic value. And, it thought beyond toothpastes to fight and win in the oral care market.
In 2000, the company introduced a 14-day tooth-whitening system, Crest Whitestrips. Compared to products used in dentists’ offices, the whitestrips allowed consumers to whiten teeth faster in the comfort of their own home at less cost. P&G was able to capitalize on the Crest brand name to ease any customer uneasiness about using the product at home without a dentist’s supervision. While the initial price of $40 was high for a P&G product, people were willing to buy the product as they trusted the Crest brand name.
Since approval from dentists formed the core of the Crest brand, P&G also had to win over dentists with Whitestrips. The company used its research to demonstrate the products safety and efficacy as well as developing a more powerful whitening product for dental-office use.
Whitestrips in its first year generated $200 million in revenue. It then introduced a complementary product – Night Effects and line extensions like Crest Whitening Liquid Gel and finally Crest MultiCare Whitening Toothpaste. If you wanted whiter teeth (as most consumers aspire for), Crest rolled out an impressive array of solutions in different formats, at different price points – to ensure that you went only to Crest and nowhere else. Over the years, P&G have expanded the Crest brand to include other products that combine oral care and aesthetics such as power toothbrushes, dental floss and mouthwash. By 2007, Crest was able to win back the #1 position in the US toothpaste market from Colgate.
Lessons for us
1. One cannot be complacent when your portfolio is performing well.
2. Understand the stocks, that may be under threat and face competition.
The example currently is of FMCG brands, Vs Patanjali Brand. The impact of this not known yet. Be watchful
3. Good management will overcome turbulent times. Hence one of the criteria in stock selection would be the capability of management. With ability and governance
4. You can equate with the FDA issues the pharma companies . Well managed companies will improve their process quality and controls and adhere to compliance and scale up their business.
This post is to remind us all that there is nothing permanent but never lose hope and more importanltly never relax
Couple of decades back, when DIP tea bags were marketed, I am sure many would recall the jingle
” Dip dip dip. Dip it a little longer, If you want it stronger, dip dip dip ”
Now read below to see how dips can be used effectively.
We all have heard the saying that ” Cash is King”. If you have cash,you can always get the best deal. The deal will be the best, if you can bargain and get the best price or If you can pick up at the best price that is thrown up.
This is very much possible especially when you want to buy the share of a company, which you wanted to be a part of your portfolio.
Stock market is not the perfect place and that is why you see variations in the price every second and every day. If the stock is fairly priced, there wont be any trade. Because the price is not fairly priced, you end up buying either at a low price to its fair value or pay a higher price to its fair value. But it is difficult to determine the fair value.
Because of the variations, the market offers opportunities and sometimes the stock is available at price below its fair value. If you really want to make good money, you need to wait for it.
Especially in the last one year, we had enough such opportunities. Some big events which gave these opportunities were
a. The market crash on 24th August 2o15 on china market crash and global sell off.
b. The day union budget for India was presented on 29th February, 2016,
c. There were some other opportunities which were not generic ( as it is called systemic) but specific to a particular sector or company which is termed as unsystemic. Example Sun Pharma on USFDA inspection dropped in July /August. Likewise Lupin also dropped to 1324
However no one knows these events before it happens. There fore one should
- always keep some cash, in their portfolio to utilise such opportunities to buy the stocks you want. It is suggested and my opinion is that 20% of your portfolio should always be in cash.
- Watch for the stock you want to buy and pick it up at the price you think it is fair.
I have checked up the performances of the stock which are highly liquid and in the Nifty 50 in the last one year.
a. The high point of the stock in the last one year.
b. The low point of the stock during the year.
c. The price as on 11th May 2016 and the returns one would have got if he had bought the stocks the lowest price.
If one is averse to playing the stocks, you could have invested in the mutual funds route also and there could have been opportunities to make decent returns.
The table below gives you the low, high and the latest prices of some of the stocks and mutual funds and the return one could have made in the short term
Of course, there is a 15% short term capital gain and in case of mutual funds, there is an exit load which may be applicable. IN spite of this for a person, who buys his time to pick stock, Money comes knocking.
It is important to keep
Keep Cash. Wait for that Dip. & Buy the stock or fund you want. Deposit the money in your kitty.
ABCD – A Buy on Cash on DIPS
DCBA – Deposit Cash in Bank Account.
You don’t need great knowledge but cash in hand & patience. to make money
For any clarification or help, please feel free to contact me.
This mail is a little longer. Have the patience to read. Or jump to opportunities.