Companies & Sectors
Arshiya International: One of Kotak’s top 5 picks for 2013, down 50% in 3 days

Kotak had put this as one of the top picks of 2013 along with ICICI Bank and Marico, even though the stock was exactly at the same level as it was in December 2011, when the Sensex was 15,455, as compared to 19,664 now

We have often mentioned that securities analysts and fund managers are often blind about corporate governance issues. Here is one more excellent example of that. Kotak Securities picked Arshiya International as one of the top five stocks for 2013. This company which is largely unknown to the investing public was placed in the august company of such blue chip stocks as ICICI Bank, Marico, Petronet and Engineers India as one of the tops picks for 2013. Arshiya is into a business called Foreign Trade & Warehousing Zone (FTWZ). Importers can import and stock products in the FTWZ and draw their stocks as per their needs. Kotak touted the stock as “unique business model, new in India, and adopted by Arshiya. The company is also ramping up its container rail business which will effectively complement its FTWZ business. The business model of Arshiya is completely integrated and a one-stop-shop to cater to the point-to-point logistics requirement of the customers”. Well argued by Kotak analysts as usual, and backed by excel wizardry that would pinpoint the exact profit the company would make five years later. But alas, instead, the stock is in a downward spin. It hit the lower circuit for three days in a running including today, crashing from Rs121.70 on 8th January to Rs70.20 today. Kotak has promptly suspended its coverage of the stock—whatever that means. What went wrong?
 

According to DNA newspaper, Arshiya is suffering from sharply reduced business, has sacked 290 employees and has not paid salaries since September. The disgruntled employees have also alleged financial irregularities. The sacked staff visited the company’s office on Tuesday and threatened the regular employees to stop working or face dire consequences. The police had to be called.
 

So, what does Kotak have to say about its chosen stock? According to Moneycontrol (http://www.moneycontrol.com/news/business/arshiya-down-20-for-2nd-day-kotak-suspends-coverage_805825.html) Kotak said in a note to clients, “The stock has declined by 40% over the last 12 months, largely driven by slowing economic growth which has led to less than estimated growth in segments like FTWZ/Container rail and high debt position. Given the above and lack of clarity on the alleged wrongdoing by the management we are suspending coverage on the stock till clarity emerges.”
 

Clearly, either the brokerage is clueless about what is really going on inside the company (often analysts are) or it had some vested interest in putting Arshiya as one of top stocks of 2013. After all, economic growth did not slow down in the last two weeks to affect only this one company so badly. And to admit to recommending a stock which has problems of governance would be affect its credibility too badly.
 

After the stock was badly hit, the company organised a concall where Samir Arora, the star Singapore-based fund manager, who lost a lot of money betting on the software bubble in 2000-01, grilled the management as did Pathik Gandhotra, partner of Don Capital. A lot of smart guys had bet on Arshiya’s “unique business model.”
 

The promoters denied that there was any margin call from the bankers but, the way Arshiya stock has been hitting the lower circuit for three days in a row shows that there are indiscriminate sellers. Such indiscriminate sellers are often financiers.
 

Arshiya’s stock price has completely bucked the bull market of the last one year. While the Sensex was 15,455 on 30th December 2011 and is 19,664 now, a rise of 27%, Arshiya was Rs127.50 on 30th December 2011 and It was still stuck at Rs125 (on 4 January 2013) before the stock got hit. This alone should have alerted the smart analysts and fund managers.

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COMMENTS

CHANDU CHARTIST

3 years ago

mostof fund mangers giving caution that mutul fund investment is risky and may correct with equity so they are masters in equity fir bhi unho ki now dolti rahti hai

Nilesh KAMERKAR

3 years ago

All types of stock recommendations / tips need to be taken with loads (not a pinch) of salts. Stock tips are doled out on a daily basis; on television, in print media, on telephone, by text messages on cell phones, in person etc.

Daily hundreds of stock tips are on offer, Law of large numbers suggests, on average some of them will turnout to be right – But these ‘winners by chance’ become apparent only on hindsight. There is no way to know in advance which of these tips will turnout to be right. Or hit the bull’s eye.

When people seek tips or act on tips offered, it simply means they depend on other people to make money for them. – An absurd situation.

These days television has become the largest source of stock tips. The supposed to be experts, in a brash manner rattle of 5 to 10 or more investment ideas (tips) based on the time allotted to him/her. But, at the end a disclosure may reveal that this ‘expert’ has not put his money where his mouth is.

In all our real life, we never come across a single instance wherein we are told by a total stranger to pick up a Rs.500 currency note lying by the roadside. Whereas here we have these tipsters who are directing us to a pot of gold - which may never be there after all.

Unless you have a trusted source with a proven track record, stocks tips are best avoided. It is always better to be safe than sorry.

REPLY

Nilesh KAMERKAR

In Reply to Suiketu Shah 3 years ago

Mr. Shah,

I have nothing more to add

Suiketu Shah

In Reply to Nilesh KAMERKAR 3 years ago

Also gentleman pl note moneylife recommendations as per their last issued if followed the way they have suggested have yielded more than 35% compounded annual return.Why would anyone want to go to HDFC whose "forced tips" yield much much much much much much much much much less.

To earn compounded annual return from India equities of more than 35% is a goldmine and I donot see any reason why people shd come to hdfc and not refer to moneylife which is by far the most credible publication in India.

I also agree TV tips etc are unrelable esp those having "self proclaimed experts".Readers shd only refer to moneylife(and not anythign else) which is far far more reliable than any "wealth management " company esp hdfc.

Suiketu Shah

In Reply to Nilesh KAMERKAR 3 years ago

Also HDFC has a proven brand name since many yrs.It is not anyones tips we are referring to.I donot like people who are negative and cynical there are enough honest trustworthy analysts like moneylife with recommendations and the interest of expecting "someone else to earn money for you" is a very cynical comment ot probably defend hdfc.

Suiketu Shah

In Reply to Nilesh KAMERKAR 3 years ago

We agree to disagree.It depends on the credibility of the person and the intention of the person giving the tip.For instance I am following moneylife recommendations since 23 Nov 2012 very very successfully.Whereas the tips HDFC Bank gives is with evil intentions.

If one is to follow yr advise then everyone giving tips is undesirable which is not the case.We strongly agree to disagree.

Suiketu Shah

3 years ago

Pl note "wealth management companies " and corporates gicve calles to suit their own purpose.They care a damn for investors.Look at the following unsolicted calls I got from Chetan G patel of HDFC Securities Mumbai week of 7 Jan 2013:-
1)Arvind Ltd:-Buy(everyone has it sell)
2)Cipla buy as they have come out with a new world class drug(which only hdfc sec knows noone else as we are dumb people.everyone has this is asell)
3)Tata Global buy)everyone has this well shortterm)
4)Sell Infossys and buy hexaw2are instead(everyone has hold infosys.Comparing Infosys with Hexaware is comparing Roger Federer to Andy Roddick)

They even pressurised me to allow myself to meet them during trading hrs the next day which I refused and I have blacklisted HDFC securities and HDFC Bank as well permanently and told them the same in writing as well 2 weeks ago.Both institutes make money trying to get people to buy when everyone is selling.This is one of the ways HDFC Bankmakes money in shares.Stay away from them.They are worst than Kotak.

Only rely on moneylife and yr money wl grow nicely and soundly as unlike cheats hdfc securities ,ml has no vested interests.

Suiketu Shah

3 years ago

What is also important for investors is the attitude of the top management.Once that is insincere no point wasting time irrespective whether one is an investor or a customer.

Several blue chip companies have built their reputation based on the values of their founders but those same values have drastically eroded for atleast one blue chip company which the outside world is not aware just yet.Which is why one of the top "honest" analysts in the country have put a sell on this blue chip company.

Jehangir

3 years ago

Dear Editor,

Just blaming the research analysts or research house may not be the correct thing as they are also human and can make errors. Its important to also view the efforts, past track record and performance of stock recommendations of analysts before being judgemental. Thanks

Suiketu Shah

3 years ago

I would vert strongly recommend readers to suggest hdfcsecurities only to enemies who they hate.

The organisation is so so awfully pathetic they have people at branch manager levels like Naresh Rever and Chetan G Patel(Kanjur Marg Branch in Mumbai) who themselves are harming the organisation significantly much much much more that all other competitors put together by giving recommendations totally opposite of what the organisation states(to harm clients and HDFC securities themselves) and driving off decade old HNI clients.

Both these 2 people have told me to sell Infosys at Rs 2,800/- which is totally different from their organisations call which is trgetting Infosys at much higher price.Now they are denyiung it but I have CCTV and taped footage of the same.

akashbakhshi

3 years ago

whats about surya pharmaceuticals? It was strongly recommended repeatedly by your website about 2 years ago. Where it is now!!!

Suiketu Shah

3 years ago

Kotak is not that bad.I wl give you a recent example of HDFC Securities who gave me a very strong unsolicted recommendation on Friday 11 Jan 2013(and also previously 3rd week Nov 2012) to exit Infosys at Rs 2800/-!

When I pointed out to them hos pathetic their tip is their Naresh Rever denies giving this tip.However I have the tip conversation taped in my office.
Infosys is tipped to be 4000/- plus in around 19 months.This is the extent broekers go to to serve their own purpose.HDFC Securities have given me seveal wrong unsolicted calls last week like buy Arvind(which is sell),sell South Indian bank long term(which is hold/buy) and buy Cipla(which is sell).

Pl beware of tips from HDFC securities whose own research team is very poor and only stick to their preferred shares in giving tips.

Suketu

REPLY

Suiketu Shah

In Reply to sreekanth 3 years ago

Gentleman Sreekanth

Moneylife has a proven track record of more than 35% annually(that too in a stagnating market) on its researched recomendation.(I have myself earned 34% since 23 Nov 2012 till date based on ml recommendations).Yr HDFC Bank promises 12% per yr(Amit Kapadia yr banks director has promised 12% returns to me on equities in 2011) but delivers -35% as they want to make illegal and legal commission for themselves.

Yr Amit Kapadia(director of HDFC Bank) has been boasting to his clients since last 2.5 yrs that his bank believes sensex wl be 24,000 every Diwali.Yr VK Sharma's team openly tells clients to invest in Hexaware instead of Infosys itself gives a clear indication what kind of an untrustworthy bank we are talking about.Yr Amit Kapadia (even after ending all relations with yr bank) has contacted my current stock broker to attempt to harm me,malign me and create problems for me in every which way.Top executives of yr bank like Amit Kapadia,Rishabh Patni,Naresh Rever and VK Sharma talk in in a threatening tone to customers to ensure customers only buy the shares they recommend so they earn fat commission.

You shd have the basic common sense not to provoke me after all this.How can you compare the best (ad most credible) publication in India with undoutedly the worst bank in India(no one comes close) beats me.

Suiketu Shah

In Reply to sreekanth 3 years ago

To further prove my point of the culture of hdfc bank(how different from ml),hdfc bank has its directors roughly threatening HNI customers liks us if we donot buy insurance or the mf or shares they suggest.Clearly there is a hugh commission element involved (both legal and illegal) else why would anyone get angry and threaten customers .Its the customers money and customers right to choose what thery wish to invest in.When we point out to their seniors they give us advise to ignore such tactics of their "directors' as if we are saints in the Himalayas!!!!!!!

ml never ever does anything close to this.They give their recommendation and leave it upto you which is the best way.

I am shocked at yr timing to defend hdfc bank when the whole world know since 5 days how they actually grow quarter after quarter at exactly 30% per yr last 9 yrs.

Suiketu Shah

In Reply to sreekanth 3 years ago

Sreekanth

I am not talking of calls going wrong.I am talking of intention of swindling customers any which way gentleman on part of HDFC.

Have a look at their receommendation list issued monthly and this wl expose how hollow their knowledge itself is as the intent is to make people buy 3 shares at wrong price out of every 5.

The way you have written you seem to be an HDFC employee.

Donot make the mistake of comparing hdfc bank with moneylife(similar to comparing Karan Rastogi to Roger Federer).There is a vast difference in the intent.

I also disagree with you.I do believe ml and equitymaster truly are "Gods" as regards equity in Indian markets.We agree to disagree.

Suketu Shah

sreekanth

In Reply to Suiketu Shah 3 years ago

Neither HDFC nor Moneylife analysts are gods. I can easily sense a grudge on HDFC and love on Moneylife just because few HDFC calls are wrong. Both MoneyLife and/or HDFC or someone else they themselves don't guarantee. Else they wouldn't waste their time recommending stocks to YOU. IF tomorrow if MoneyLife also disappoints you then you may sing the same song. So, precisely, it is the people who has raise their standards. YOU can't borrow knowlegde from anyone!

Narayan

3 years ago

"top picks of 2013" is not a trading bet but a short term investment bet.

Do you know how much money they deduct from your investment, as a fee? for that kind of deduction, you should expect a beter recomendation from kotak..

REPLY

Narayan

In Reply to Narayan 3 years ago

Dear snehakamath,

"top picks of 2013" is not a trading bet but a short term investment bet.

Do you know how much money they deduct from your investment, as a fee? for that kind of deduction, you should expect a beter recomendation from kotak..

Narayan

3 years ago

If you remember, the same kotak, recommended SKS Microfinance, after it's recommendation, the stock fell from 3 digit to 2 digit.. I've put 15 lacs in kotak's retirement plan from 2008 and it has not performed, when I sent a mail to them complaining about non-performance, instead of responding to my query, they simply replied saying "we will not respond to unregistered email ids.." also, they have not bothered to respond to my registered email ID.

00912334

natarajan

3 years ago

Sir, Kindly bring into light of such of things even earlier so as to save small investors like us.

Suiketu Shah

3 years ago

Its an open secret "wealth management" companies get a cut in pushing purchases dull shares of shares when they are at peak(noone wants to buy).

This is why ml picks are so much more relaible than most wealth management companies who have vested interest at the cost of their customers.

snehakamath

3 years ago

Investing public should surely know the difference between investment shares and trading shares.
ICICI, Infy, L&T,BHEL,Tata Motors , M&M & SBI are surely investment shares , available at really good prices currently and in case when correction happens still can be held for long period, sure to give returns.
Ashriya international, Karnataka bank, LITL, GMR,GVKPIL,Adani, JPAssociat etc are high volatile shares which are considered high beta also.tHESE ARE TRADING BETS. hence struict stop loss is a must while gambling.
Normally trading shares should be between 5% to 10% of the total portfolio.
Why should we blame Kotak for recommending a trading bet ?

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