Liberty Phosphate – Exit

We had recommended Liberty Phosphate on 29th March, 2012 at Rs 64. The stock has more than doubled and created a new all time high @ 160 today. The stock has closed at about 148 today and we recommend an exit from the stock.

Liberty

Though the stock may seem cheap but there are several negatives/limitations:

  • The industry is highly dependent on Government policies. Any change can lead to significant change in prospects in a very short term.
  • The SSP industry though doing well as of now but its highly competitive. There are hardly any entry barriers and hence over a longer term, the margins should moderate.
  • The company’s equity has increased in past and the promoters had increased their holding at very cheap prices by doing preferential allotments to themselves. This is negative for minority shareholders.

We feel there are several better ideas we are invested in for long term compounding. One may switch to GRP, Smruthi, Sree Rayalseema Hypo, Narmada Gelatine, Sree Sakthi Paper, Sahyadri etc.

13 thoughts on “Liberty Phosphate – Exit”

  1. Hi Ayush

    Just a line of thought how do you rate sahyadri with HIL Ltd and narmada gelatine with nitta gelatine(both on business and financial aspects?)

    1. HIL is better in terms of consistency, transparency and quality. Infact the higher dividend pay-out should ensure stock price movement in HIL. However as we are looking for medium term in this sector, we feel Sahyadri is more undervalued and may deliver better returns if the sector continues to do well.

      We feel Narmada is better as it has been a consistent performer and has more stable financial performance.

  2. Sir out of the above mentioned scripts – Smruthi, Sree Rayalseema Hypo, Narmada Gelatine,Sahyadri, which ones are good to add at current levels. Like smruthi. Are thesre good levels to enter. Thanks. 🙂

    1. I think one should study all of them and make them part of portfolio. Allocation can be increased based on individual preference.

  3. Hi Ayush, today i visited your blog for the first time. pls guide me about liberty phosphate. i am holding [email protected] for more than two years. should i exit completely or not. Company has expansion plans in 2013 also.

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