DCW LTD. : BSE CODE 500117

DCW IS A DIVERSIFIED manufacturer of basic chemicals, such as:
Caustic Soda, Liquid Chlorine and Chlorine based products such as Trichloroethylene and HCL : Upgraded Ilmenite or Synthetic Rutile
Yellow Iron Oxide , PVC Resin, Soda Ash, Ammonium bi-carbonate
Liquid Bromine and Bromide.

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The company is in existence from 1925 and was earlier known as Dhrangadhra Chemical Works, with plant in Dhrangadhra, Gujarat. The company has come a long way since. The name of the company has been changed to DCW Ltd. and now the company has plants in Gujarat and Tamil Nadu.

The company has a share capital of 39 Crores made up of equity shares of FV of Rs.2.00 each. The company has reserves of over 269 Crores, thus making it a bonus candidate in another 2-3 years.

Promoter’s group is holding 40% shares. Institutions including FIIs are holding about 17% shares and balance is held with the public.

The company has during the year 2007, issued equity shares to FIIs and Promoter Group Companies, at Rs.10.00 premium, viz. Rs.2.00 + Rs.10.00 = Rs.12.00.

The company is consistently in profits and is also paying dividends. The share price of the company touched 52 week low on 16.09.2008.

In my lessons on fundamental analysis, I had stated the following factors to be considered for picking up shares.

1. The company should have regular profits and cash flows.
2. Placement of shares to promoter groups or FIIs at premium is good.
3. At some point of time, a well performing company may touch year’s low.

DCW has qualified on all these fronts. Considering the factors, one can consider picking up DCW shares for a reasonable expectation of 20-25 percent capital appreciation in 12 months.

Disclaimer: This report has been prepared solely for information purposes and the investment is the sole decision of the investor. Such information is impersonal and is not an inducement to invest. The information contained herein has been obtained from sources believed to be reliable and author accepts no responsibility for the accuracy of its contents. Investors are advised to satisfy themselves fully before making any investments or committing themselves and should consult their own financial consultants whether and how to use such information in making any investment decision. The author accepts no liability arising out of use of the above information/ article.

Kindly note :

a) We advise only regarding fundamentally strong and performing companies. The companies may be mostly profit making and in a few cases, they may be turn around companies.
b) Please go through our fundamental analysis carefully, verify the facts and figures (if you need to) and only then invest.
c) We expect investors to have a time horizon of at least one year and more.
d) We do not advise for short term investing, which is risky.
e) Despite all these, we do not take any responsibility for your financial matters. Investment is solely your decision.



KASHIWALA

FOLLOW UP ARTICLE : MUTUAL FUNDS

MUTUAL FUNDS :

Several months back I had posted an article How to create wealth using Mutual Fund Route. Many people e-mailed that they had already started SIPs in schemes like Magnum Contra, Franklin Bluechip etc. Few persons who had started investing in Magnum Contra stated that they are seeing falling NAVs and are apparently worried. No one needs to worry for the following reasons.

IF YOU READING THIS IN KASHIWALA'S SITE, IT IS ORIGINAL. IN OTHER SITES, IT IS PIRATED.

a. Our own near and dear ones are investing in Magnum Contra SIP @Rs.3000.00 per month and our highest NAV purchase price was Rs.39.00 and lowest was Rs.23.50. In the meantime, we have received a dividend of Rs.4.00 per unit.

b. My advice to people is to invest at least for seven years in Dividend reinvestment option (more if you can) and wait for 3-4 years more.

c. Try to aim at a corpus of at least 15000 units or 20000 units within this time. Do not count your investment in Rupee value, rather count in in terms of number of units.

d. When the NAV is low, you get more units. When the NAV is high, you will get more dividend which will be ploughed back as further investments.

e. After a period of say, 8-10 years, if you have achieved your goal of 20000 units (suppose), convert it into dividend pay out option. Even if the fund pays a dividend of Rs.6.00 per unit, you will get Rs.10000.00 per month (Rs.120000.00 per annum). Presently when the NAV was around 29 during the years 2006 and 2007, the fund paid a dividend of Rs.4.00 per unit.

f. Finally, do not be perturbed by the falling NAV. This will help you indirectly by bringing more units into your kitty. Continue your SIP. Those readers who have not started any SIP, may start now with at least 3000 to 4000/- per month with a clear cut aim of at least 20000 units in another 7-8 years time.

g. The positive factor in the overall mutual fund industry is that they are sitting on a pile of cash and are making selective investments. So, their own investments will get averaged and we can expect better times ahead.

h. Last but not the least, have a positive view of the market and your investments. In the long run, nothing will go wrong.

IF YOU READING THIS IN KASHIWALA'S SITE, IT IS ORIGINAL. IN OTHER SITES, IT IS PIRATED.

Good luck.

Kashiwala

REGULAR POSTS

DEAR READERS,

I have not been making any posts for the last several weeks, due to professional and family pre-occupations. There were some bereavements in the family circles as also some health related problems.

I will be starting regular posts in the near future. I thank readers who have been sending me e-mails regularly.

Kashiwala