My answer to arora81. I understand ur plight, but these situations help to learn the right lessons. I wont answer ur question directly, but give u some guidelines. Rule 1 is " Dont lose money ", and Rule 2 is " Dont forget rule 1." Did u really study TVS before u entered the stock ? Did u analyze its results of past 5 years ? Never enter any stock without proper study, Never, Never, Never.
The first lesson is that dont invest in the stock if u r not ready to hold for 10 years. Why ? I will tell u the reason, see if u have invested in NIITTech at 540, say approx 540 x 3.91 = 2110 cr market cap, so in effect u hv paid 2110 cr if u hd bought the whole company, anyway, at a profit of 129 cr, u get a return of 129/2110 = 6.11 %, so the stock is like a bond which gives u a return of 6.11 %. But the difference between a bond and a stock is that a bond has a fixed coupon rate, while a stock has an increasing coupon rate. If u assume that Niittech increases profits by 25 % every year, then as per rule of 72 of finance, dividing 72 by the growth rate gives u the number of years it takes to double, so at 25 % it takes 2.88 years to double, so in 10 years it is 3.50 doubling, that is 129 x 2 x 2 x 2 x 1.50 = 1548 cr. So, ur return on ur initial payment is 1548/2110 = 73.36 %, now u can see that from 6.11 % u hv reached 73.36 %. Assume that 20% of 1548 cr is distributed as dividend, that is, 310 cr, which gives a dividend return of 310/2110 = 14.7 % on ur initial investment in the 10th year, and the capital appreciation is not included. I hope u understand why equities are considered long term investments.
So the key is finding good growth companies. And the second is, not pay any price, but buy them when they are available at 50 % discount to its fair value price. In short, for Niittech, if we assume that the company has a profit of 1550 cr by year 10 from now, and assuming that it trades at 18 times, then its market cap will be 27900 cr, assuming that our target is a 15 % return on equity investments every year (if u r able to earn 15% every year for 15 years u r a very very smart investor), it means approx. 2 doubles in 10 years, so the maximum payable price is 27900 divide by 2 and then again divide by 2, which gives a answer of 6975, and we will buy only when the quoted price is 50 % below the maximum payable price, and that is 6975 divide by 2 = 3487 cr mkt cap divide by 3.91 cr shares = Rs. 891 per share. Did u understand ? It is simple, but u need to apply some mind and time. Once u learn to do this u will not rush into any stock at any price, and when u learn to do that, u will uphold rule 1 "Dont lose money".
I know u will be frustrated by my answer, u just want to know whether the stock will reach 1000 in a year. I think it will, but dont take it seriously, it might not also, if the rupee appreciates substantially from here. If u ask the question to God, he will not know, if u ask to Rajendra Pawar (Chairman of NIITech) he will not know, if u ask to Arvind Thakur (Jt MD and CEO of NIITech) he will also not know, and if u ask me frankly, I dont know.
I hv said before that only thing that matters on the market is "conviction", conviction that u hv made the right decision, and that comes from our own study, any amount of external advice will not help, bcoz conviction helps u to take the opposite direction from that what the general public does, and it is only those people who take the opposite direction make money, following the crowd might be a right strategy in social environments, not on the stock markets. Conviction gives u stability when others are jittery, conviction gives u the courage to fight greed and fear. And if u cant do all this, then just invest in a few good companies and go to sleep, dont watch the prices, dont watch TV, dont read economic times, dont visit these boards, and pass the stock holding to ur children. Invest only that amount in stocks which u will not need for the next 10 years, and also be mentally ready that u can lose all that in a crash. Otherwise, u will keep shifting fm one stock to other and making losses in each deal. So cool down, relax, read my post a couple of times, and get in control of urself. Every trade has its secrets, and I have revealed many of them in my posts, and these hv been revealed by the best investors, the only problem is that while everybody can understand, only one in a thousand can diligently follow that path. All the best, Happy Investing!
i have bought niittech at 545 so hopefully what he said is true
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