BDL : Booked a profit of 15% on invested capitalCons :
DIIs and FIIs are reducing their stake, as per the data released on Sept 2023, whereas retailers are increasing their stake. So this shows that the strong hands are booking their profits and it is not a good sign in the near term.
The financials are not that attractive. The valuation is high at the current price point.
Pros :
Bharat Dynamics Q2 FY24 Highlights (Standalone, YoY)
Revenue up 15.2% at Rs 616 crore vs Rs 535 crore (Bloomberg estimate: Rs 519.97 crore).
Ebitda up 42.8% at Rs 134 crore vs Rs 94 crore (Bloomberg estimate: Rs 79 crore).
Margin at 21.76% vs 17.54% (Bloomberg estimate: 15.20%).
Reported profit up 94.1% at Rs 147 crore vs Rs 76 crore (Bloomberg estimate: Rs 91.7 crore)
But these positive aspects are priced in already and institutions may consider this as an opportunity to book their profits. So this is a case of buy the hype and sell the news scenario.
The overall market is also in a key rejection levels and if a sell-off happens then overvalued stocks like this will be the most effected. So considering all these, I decided to book profit in this stock and take some chips off the table. Will consider re-entry if price comes back to favorable valuations.
So booked a profit of about 15% of the invested capital. I had an allocation of about 2.5% of the total capital as 2 entries at various inflection levels.
The previous posts related to this scrip is attached along with this post. Do check that out.
I'm well aware that there is a potential for a move of about 15% in the near term. But I'm ok to let go of that since there is a downside risk of over 23%.
