Hello Sir,
Hope you are doing well.
Everyone is looking for turnaround opportunities that can turn out to be multibaggers.
The question is – How does one screen for such stocks?
We believe one good way to screen for such stocks is as follows:
Look for Preferential allotment of warrants to Promoters in companies in which there’s been a decent correction in stock price (40-50% or more)
Let’s look at a case – Ashapura Minechem
- From FY 16 till FY 20, the company’s sales and profits were dropping year after year
- Sales had decreased from Rs 1,700 crore + to only Rs 334 crore and stock price had fallen from 113 odd levels in Jan’18 to 17 odd levels in Jul’19
- On 7th Jan’20, company announced that a meeting of Board of Directors will be held on 10th Jan’20 to consider allotment of 45 lakh Preferential warrants to Promoters. In Jan’20, the stock was quoting around 30 odd levels
- On 28th Feb’20, the company allotted 45 lakh convertible warrants @ Rs 31.95/- each to Promoters. At this time, while there was no sight of turnaround in business, it was still an interesting event as Promoters were willing to take a bet despite the business being down
- While FY 20 ended with just Rs 334 crore sales, in FY 21, the sales increased to Rs 1,148 crore
- Probably, the promoters were anticipating a turnaround in the business and thus opted for convertible warrants at Rs 31.95/- each
- The markets also turned supportive and the stock went up to 150 odd levels by Apr’21
- After recording a high of around 165 odd levels in Apr’22, the stock again started correcting and reached lows of 75 odd levels in Dec’22
- On 28th Dec’22, company announced that a meeting of Board of Directors will be held on 2nd Jan’23 to consider allotment of 40.4 lakh Preferential warrants to Promoters
- On 14th Feb’23, the company allotted 40.4 lakh convertible warrants @ Rs 95.96/- each to Promoters
- Markets again turned favorable and the stock touched a high of 450 in Dec’23 and currently trading around 315 odd levels.
There might be many cases where the business and the stock may not have done well, post allotment of warrants to promoters during low phase. However, the idea is, screening for such stocks can be a good starting point for further research and to catch the turnaround stage early.
Our 2 Latest Stock Recommendations for Alpha and
- Special Situation opportunity – Open Offer – Changes in ownership, Well known investor invested in the stock, management aiming double digit growth
- New Stock Recommendation – Sub 5,000 crore market cap company. Change in management, strong growth outlook of 15-20% over the next few years and reasonable valuations
You can get the above mentioned recommendations by subscribing HERE
Note: We give detailed reports with our recommendations so that you can learn how to select stocks, understand the thought process behind stock selection and understand the procedure to participate in Special situation opportunities.
(End)
Disclaimer: This is not a recommendation to buy/sell any of the stocks mentioned above. The securities quoted are for illustration only and are not recommendatory.
Best Regards,
Ekansh Mittal
Research Analyst
Web: https://www.katalystwealth.
SEBI Research Analyst Registration No. INH100001690
Research Analyst Details
Name: Ekansh Mittal Email Id: [email protected] Ph: +91 727 5050062
Details of Associate: Not Applicable
Analyst Certification: The Analyst certify (ies) that the views expressed herein accurately reflect his (their) personal view(s) about the subject security (ies) and issuer(s) and that no part of his (their) compensation was, is or will be directly or indirectly related to the specific recommendation(s) or views contained in this research report.
Disclaimer: http://www.
Address – 7, Panch Ratan, 7/128, Swaroop Nagar, Kanpur – 208002, Contact No. – +91-7275050062
Compliance Officer – Mr. Ekansh Mittal, +91-9818866676, ekansh@
Grievance Redressal – Mittal Consulting, grievances@
“Registration granted by SEBI and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors”.
“Investment in securities market are subject to market risks. Read all the related documents carefully before investing.”
The views expressed are based solely on information available publicly and believed to be true. Investors are advised to independently evaluate the market conditions/risks involved before making any investment decision
This report is for the personal information of the authorized recipient and does not construe to be any investment, legal or taxation advice to you. Ekansh Mittal/Mittal Consulting/Katalyst Wealth is not soliciting any action based upon it. This report is not for public distribution and has been furnished to you solely for your information and should not be reproduced or redistributed to any other person in any form. This document is provided for assistance only and is not intended to be and must not alone be taken as the basis for an investment decision. Ekansh Mittal or any of its affiliates or employees shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. Neither Ekansh Mittal, nor its employees, agents nor representatives shall be liable for any damages whether direct or indirect, incidental, special or consequential including lost revenue or lost profits that may arise from or in connection with the use of the information. Ekansh Mittal/Mittal Consulting or any of its affiliates or employees do not provide, at any time, any express or implied warranty of any kind, regarding any matter pertaining to this report, including without limitation the implied warranties of merchantability, fitness for a particular purpose, and non-infringement.
The recipients of this report should rely on their own investigations. Ekansh Mittal/Mittal Consulting and/or its affiliates and/or employees may have interests/ positions, financial or otherwise in the securities mentioned in this report. Mittal Consulting has incorporated adequate disclosures in this document. This should, however, not be treated as endorsement of the views expressed in the report.
We submit that no material disciplinary action has been taken on Ekansh Mittal by any regulatory authority impacting Equity Research Analysis.
Disclaimer: You can access it here – LINK
Whether the research analyst or research entity or his associate or his relative has any financial interest in the subject company/companies and the nature of such financial interest – No
Whether the research analyst or research entity or his associates or his relatives have actual/beneficial ownership of 1% or more securities of the subject company (at the end of the month immediately preceding the date of publication of the research report or date of the public appearance) – No
Whether the research analyst or research entity or his associate or his relative has any other material conflict of interest at the time of publication of the research report or at the time of public appearance – No
Whether it or its associates have received any compensation from the subject company in the past twelve months – No
Whether it or its associates have managed or co-managed public offering of securities for the subject company in the past 12 months – No
Whether it or its associates have received any compensation for investment banking or merchant banking or brokerage services from the subject company in the past 12 months – No
Whether it or its associates have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company in the past 12 months – No
Whether the subject company is or was a client during twelve months preceding the date of distribution of the research report and the types of services provided – No
Whether the research analyst has served as an officer, director or employee of the subject company – No
Whether the research analyst or research entity has been engaged in market making activity for the subject company – No