Yesterday, we released our latest Special situation opportunity for our Alpha + members and would like to share with you details on the same.
As you might be aware, special situations constitute opportunities arising out of announced corporate transactions such as De-listing, Open offers, rights issue, de-merger, bankruptcy restructurings, etc.
In markets, nothing is risk free; however, if carefully analyzed, one can always look for opportunities with low downside risk.
At the same time, the holding period in general for such opportunities is 3-5 months.
The idea behind participating in special situations is to try and generate additional returns on the portfolio by investing surplus cash in such opportunities.
The latest special situation recommendation is a buy-back based opportunity. The holding period for this one should be around 3-4 months.
The upside potential is around 20% from our recommended levels (assuming full acceptance).
Regarding downside, we have done scenario analysis. In the most probable case (as per our expectation), we believe the stock will have to correct more than 20% for investors to start losing money.
It’s always fun to analyze special situations and take calculated risks.
Note: From 1st Oct’24, the taxation on buy-back has changed. As per our understanding, the taxation change on buy-back might be beneficial for you if your annual taxable income (excluding capital gains) is less than 12 lakhs.
Hope you found the blog post useful and it added value to your investment decisions. Sign up for more interesting stock ideas and industry notes.
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.
Ekansh Mittal
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