Wednesday, January 23, 2008

Zen Technologies - Risk-free Buy

If Rakesh Jhunjhunwalla were to tell you that he had done his due diligence on a company, was buying the stock & that you could enter at the same price as him, would you do so ?

Well, most investors would, I guess. I surely would, given his excellent success rate & his eye for spotting multi-baggers in their infancy.

Not many of us are fortunate to have such conversations with RJ, but we can do the next best thing – read the announcements & notices that appear on the stock exchanges. And every once in a while, we may find RJ telling us a thing or two via this medium.

For example, on Friday, 18th Jan 2008, Zen Technologies (Bse Code : 590032) announced that it was making a preferential issue of shares and warrants to Rakesh & Rekha Jhunjhunwalla @ Rs 135/-. Aha, get the gist ?
Anyway, so what did RJ see in this company ? If one reads the following reports (a bit dated) one will get a very good idea about this company :

Company Performance
While the company has not grown as envisaged over the last 1-2 years, it appears that the company is finally on the move, and this author expects the company to do sales of 30 Cr this year, 50 Cr next year (FY09) & better still in FY10. So one is looking at an EPS of Rs 10-12 this year and Rs 18-20 in FY09. Therefore current rates appear reasonable with good potential for upside.

Investment Recommendation
At the current rate of Rs 135, the same price as RJ is paying (and with the understanding that he has done a due diligence on our behalf), the company appears to be a risk free buy, even more so on declines.

Author: Bosco Menezes

Recommendation Date : 23.01.2008

Disclaimer/Disclosure :
At the time of writing this article the author has a position in the stock covered by this report. The author or any of his dependent family members may make purchases or sales of the securities mentioned in the report while the report is in circulation.
Readers/recipients of this report are strongly advised to do their strict due diligence, and should be aware that the value of investments can go down as well as up. The author shall not be liable for any direct or indirect losses arising from the use of the contents of this report, and readers are therefore cautioned to use the information contained herein at their own risk. In fact, readers would do well to seek the advice of a qualified independent advisor.The author certifies that all of the views expressed in this report accurately reflect his personal views about the subject company.
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