Cracking the Matrix code
	Posted by : Mr_STOCHASTIC at 09:44 (30th May '05)
	lets try to learn dodging bullets ..that is lets buy like guys like FIDELITY do !!! I tried to analyse what fidelity bought?.to identify a sure shot algorithm?a kind of pattern. Fidelity has bought KEC intl, SRF,Utttam Galva,Samtel col. And exited Aztec. A common pattern I came across was MCRR. market cap to sales ratio. or mar cap to revenue ratio.lets call it MCRR. is shows what value the market is paying for 1 rupee of revenues that the cmpany earns. it is typically more useful to when "earnings" are not present..or it is going thru a start up / turnaround phase. and using hence p/e can be misleading.for eg. if sales/revenue is 1000 crs and mkt cap is 500 crs MCRR is 0.5. it means theoritically one can buy the company at half the price of its one year sales. wud be better to compare with industry standards. of course MCRR shud be used with other metrics like p.e. EV/EBITA. low MCRR like low PE might not necessarily mean it a good buy. the co. might have hig debt..mgt quality ..growth issues.. MCRR for all fidelity buys were less than 1.0. utttam galva MCRR is less than 0.22.for aztec mCRR was at 7 times. INFY TCS WIPRO also at at similar valuations. some sectors / stocks with low MCRR are jewellry ( su-raj classic diamonds MCRR less than 0.3)..ceramics..( murudeswar bell ceramics regency tiles) era constructions less than 0.5( but it has lesser margins and higher debt). still cheap. hindustan constructions less than 1.0. higher margins than peers ..8%.good buy. nag cons IVRCL more than 1.0. gammon MCRR more than 2. arvind mills mCRR is 1.5. same with raymond. jbf ind less than 0.22 soma textiles less than 0.5 sutlej ind less than 0.5 gangotri textiles. less than 0.3 kirloskar oil engines less than 1.0.good buy. all peers like cummins swaraj warsila above 2.0. in pharma most MCRR are more than 1. few like elder pharma less than 1.0.biocon MCRR is 6. Index stocks oil PSU are dirt cheap MCRR less than 0.2. zee tele MCRR 8.5. INFY WIPRO TCS 7 plus. TISCO more than 1. SAIL less than 1. nav bharat more than 1.0. NTPC greater MCRR then reliance power / tata power. other low MCRR are nilkamal plastics MCRR less than 0.3 bhartiya intnl apar ind both MCRR less than 0.6. int. travel house less than 2. ( thomas cook MCRR 5) when MCRR and p/e is both low than industry standards..it gives a double confirmation..like GTC. MCRR Was at 0.3 p/e was 4 compared to industry. above 5 MCRR and 15 p.e we have some cases where p./e is high but MCRR is low. like titan pe 100 MCRR 1.3 lotte india p/e 60. MCRR less than 1. Nestle MCRR 3.5 so guys what are ur views ?? will post more on this later. slept at 6 AM y`day thanks to my "discovery"..lol