Note: Part of newsletter sent on 04-September-2015 to my newsletter subscribers.
Frankly I do not like giving tips for paid or free. But sometimes its very tempting that I cannot stop myself. 🙂
Right now ICICI Bank is currently at 256, and is looking very attractive to buy.
It is almost 35% down from its recent high of 393.
There is NOTHING WRONG with the bank – so this is clear panic sell.Â CompareÂ this to HDFC Bank and AXIS Bank.Â They are not that down. This is known as RelativeÂ Valuations. Bargain hunters look for it as well.Â
According to WikiPedia:
Relative valuation also called valuation using multiples is a generic term that refers to the notion of comparing the price of an asset to the market value of similar assets. In the field of securities investment, the idea has led to important practical tools, which could presumably spot pricing anomalies. These tools have subsequently become instrumental in enabling analysts and investors to make vital decisions on asset allocation.
According to InvestoPedia.com:
A business valuation method that compares a firm’s value to that of its competitors to determine the firm’s financial worth. Relative valuation models are an alternative to absolute value models, which try to determine a company’s intrinsic worth based on its estimated future free cash flows discounted to their present value. Like absolute value models, investors may use relative valuation models when determining whether a company’s stock is a good buy.
If you have free cash you can buy ICICI Bank equity in cash for a quick 10-15% return probably in 2-3 months.
IMPORTANT: DO NOT BUY MORE THAN 3-5% OF ALL YOUR TRADING ACCOUNT HOLDING. ITS IMPORTANT TO DIVERSIFY RISK. JUST BECAUSE YOU BELIEVE IN ME DOES NOT MEAN WHAT I SAY WILL ALWAYS BE CORRECT. TAKE YOUR OWN DECISION.
I hope you understand this very important thing – learn to diversify risk. This 10% profit will definitely come soon – but still you should know where to draw the line and how much to invest.
I have done a few things as well. Will share in a separate email.
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Dilip Shaw, Founder
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