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

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

Moneylife Digital Team | 11/01/2013 04:30 PM | 

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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23 Comments
CHANDU CHARTIST

CHANDU CHARTIST 1 year 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

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Nilesh KAMERKAR

Nilesh KAMERKAR 1 year 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.

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Suiketu Shah

Suiketu Shah 1 year ago in reply to Nilesh KAMERKAR

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.

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Nilesh KAMERKAR

Nilesh KAMERKAR 1 year ago in reply to Suiketu Shah

Mr. Shah,

I have nothing more to add

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Suiketu Shah

Suiketu Shah 1 year ago in reply to Nilesh KAMERKAR

This is because everything is crystal clear for the readers of this website.

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Suiketu Shah

Suiketu Shah 1 year ago in reply to Nilesh KAMERKAR

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.

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Suiketu Shah

Suiketu Shah 1 year ago in reply to Nilesh KAMERKAR

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.

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Suiketu Shah

Suiketu Shah 1 year 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.

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Suiketu Shah

Suiketu Shah 1 year 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.

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Jehangir

Jehangir 1 year 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

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