Update on Waterbase, JK Agri and Chemfab

Recent Developments

Our blog readers have posted several comments to know the impact of recent rainfall on their investment. This post is in relation to our future action plan to safeguard our investment.

Recent heavy rainfall and cloud burst triggered massive flooding in southern states of India. Even though flooding is localized but heavy rain has adverse effect on the crops, aquaculture, construction and other businesses. 

Earlier in Q2 seed and pesticide industry has posted very poor results due to drought in some part and overall 10-15% rain shortfall in the country. Price capping on high margin hybrid seeds has added further pressure on margins. Next best performance quarter for these stocks will be Q1 2016-17.

Shrimp farms and salts fields are effected due to heavy rain and floods. There will be some financial impact on the companies operating their business in heavy rain affected areas. There is possibility of some muted results  in Q3 from these companies.

Our Strategy 

• Investors with large portfolio and allocation less than 10% each in Waterbase or JK Agri or Chemfab Alkali and sufficient fresh fund flow to meet future investment plan can hold these stocks and add more on further fall.

• Investors with small portfolio and allocation more than 10% each in Waterbase or JK Agri or Chemfab Alkali with limited option for fresh investment can switch some part of their investment into Technocraft  or DTIL. 

• It will be very good investment opportunity if Waterbase slide below 100 and JK Agri slide below 400. Need to re-enter before Q4 results in case of swap.  

Conclusion

This is temporary situation and there is no change in fundamental of any company. Any deep correction in these stocks due to above situation or poor results should be taken as opportunity to add  at lower level.