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If you ever happen to buy Z category stocks then your knowledgeable Stock Guru next door may scoff at you as if you are investing his/her money! And even if its not your neighbours money, yet the scoffing may be justified. And for good reason.
Stocks get shifted to Z category for not following certain norms. To cite a few norms; companies, failing to submit annual listing fees, yearly annual reports, failing to make demat arrangement with both the depositories; are placed under ‘Z’ Group. The stock exchange does so as an investor-friendly measure and to inform and warn the potential investors about the level of non-compliance of the listing agreement or as a surveillance measure. Way back in September 2003, BSE had shifted over 600 companies to the Z category. The companies shifted by BSE in Z category are under trade-to-trade. This is mainly done by the stock exchanges to avoid excessive speculations.
You really require nerves of steel to take a call on Z category stocks.
Interestingly, I came across 2 companies having sound business models but were unfortunately languishing in the Z category way back in 2004. Just have a look below and see for your self how these 2 stocks have risen from the ashes to become multibaggers, so to say.
Stocks get shifted to Z category for not following certain norms. To cite a few norms; companies, failing to submit annual listing fees, yearly annual reports, failing to make demat arrangement with both the depositories; are placed under ‘Z’ Group. The stock exchange does so as an investor-friendly measure and to inform and warn the potential investors about the level of non-compliance of the listing agreement or as a surveillance measure. Way back in September 2003, BSE had shifted over 600 companies to the Z category. The companies shifted by BSE in Z category are under trade-to-trade. This is mainly done by the stock exchanges to avoid excessive speculations.
You really require nerves of steel to take a call on Z category stocks.
Interestingly, I came across 2 companies having sound business models but were unfortunately languishing in the Z category way back in 2004. Just have a look below and see for your self how these 2 stocks have risen from the ashes to become multibaggers, so to say.
 Share Price | Z GROUP 27 May 2004 | B GROUP 8 Oct 2010 | Multibagger |
| Kirloskar Pnumetic | 23 | 598.70 | 26 bagger in 6 yrs |
| | 64.20 | 1170.00 | 18 bagger in 6 yrs |
Kirloskar Pnumatic Co. Ltd
This company operates in two segments: compression systems and transmission products. Compression systems manufactures a variety of compressors and also undertakes designing and packaging of refrigeration systems, and serves various industries, such as power generation, air separation, textile, iron and steel, oil and gas, cement, defense, railways, construction and mining, fertilizers, pharmaceuticals, dairy, brewery, fish and meat processing, cold storage and ice plant. Its products include air compressors, air conditioning and refrigeration compressors, and systems. The transmission products are manufactured for rail traction gears, wind turbine gearboxes, marine gearboxes and gearboxes. The transmission products include power transmission equipments (torque convertor), reverse reduction gears for marine gear engines etc .
Market Cap of the company is Rs.768 crores and its PE is 13.9.Annual Revenue in FY 2009-10 was Rs. 474 crores and PAT was Rs.47.5 crores. PAT Margins were 14.39 per cent, ROCE was 41.21 per cent and ROE was 32.85 per cent.
The company recently received an order for supply of Refrigeration Compressor Package, from Jindal Steel & Power Ltd, Orissa. the order is worth Rs. 118 Crores gross, taking the total order board for ACH & Process Gas Division to the tune of Rs. 460 crores.
No way to know how many folks out there picked up Kirloskar Pnumetic Ltd at Rs.23/share and still hold it when its shinning crimson bright like a 26 bagger – guess many of you may give these folks a standing ovation with hidden remorse because you probably did not buy it then since it was branded Z.!
Gujarat Reclaim and Rubber Products Ltd [ GRRPL ]
GRRPL produces reclaim rubber from scrap of whole tyres, tread peelings, natural rubber tubes, butyl tubes, moulded rubber products for different applications in both, tyre and non tyre rubber products. Today, through steady growth and a strong vision, GRRP has emerged as the largest manufacturer of reclaim rubber in the country and among the largest globally.
GRRPL has an Equity base of just Rs.1.33 crores, Reserves are Rs.51.93 crores. and the company does business of Rs.140.81 crores and generates PAT of Rs.13.81 crores – that was the fiscal 2009-10 results.. PAT Margins were in the range of 11 to 17 per cent during last 5 fiscals. ROCE was 33.64 per cent and ROE was 28.82 per cent in 2009-10..
Those who had the gifted foresight to pick up a ‘Z’ listed company like GRRPL which makes saleable products from scrap way back in May 2004 @Rs.64/share may perhaps be sitting like a Prince/Princess on a 16 bagger!
In short, you will need Lady Luck to be by your side for months or years at a stretch if you were ever lucky to spot a potential multibagger languishing in Z category.
By no means am I suggesting that you should buy Z category stocks which could be delisted to your horror after taking a call on the same – so, staying away from Z category stocks is a prudent decision. But, exceptions are always there.
No matter how good a company maybe, we at HBJ Caps would not look at companies listed under Z category but we could certainly re-vist the company if the business models appear to be as good as the ones that’s just covered..
After all one needs to be careful when dealing with this ”stock market” monster and in this world of stocks and scams, if companies can rise from the ashes they can also tumble from heavenly glory “Enron” style!
Wall Street or Dalal Street – you can find smart folks out there who know how to make money even from the depths of the ocean and crust of the earth! Do you have the courage to put on the shield of risk on your chest and the badge of fortune on your sleeves and go onward and forward to take the markets head on with the grit and determination of emerging victorious with the trophy of wealth and prosperity that is beckoning you every day, day by day. Come on, wake up, Sid or whatever your name is and just do it! Start investing now in the great Indian story if have never done it before. And when in doubt about victory or defeat, just call us and we’ll be honoured and delighted to help and guide you.
Kishor S. Khot, [Kishor@hbjcapital.com], Equity Strategist, HBJ Capital Services Pvt Ltd
Market Cap of the company is Rs.768 crores and its PE is 13.9.Annual Revenue in FY 2009-10 was Rs. 474 crores and PAT was Rs.47.5 crores. PAT Margins were 14.39 per cent, ROCE was 41.21 per cent and ROE was 32.85 per cent.
The company recently received an order for supply of Refrigeration Compressor Package, from Jindal Steel & Power Ltd, Orissa. the order is worth Rs. 118 Crores gross, taking the total order board for ACH & Process Gas Division to the tune of Rs. 460 crores.
No way to know how many folks out there picked up Kirloskar Pnumetic Ltd at Rs.23/share and still hold it when its shinning crimson bright like a 26 bagger – guess many of you may give these folks a standing ovation with hidden remorse because you probably did not buy it then since it was branded Z.!
Gujarat Reclaim and Rubber Products Ltd [ GRRPL ]
GRRPL produces reclaim rubber from scrap of whole tyres, tread peelings, natural rubber tubes, butyl tubes, moulded rubber products for different applications in both, tyre and non tyre rubber products. Today, through steady growth and a strong vision, GRRP has emerged as the largest manufacturer of reclaim rubber in the country and among the largest globally.
GRRPL has an Equity base of just Rs.1.33 crores, Reserves are Rs.51.93 crores. and the company does business of Rs.140.81 crores and generates PAT of Rs.13.81 crores – that was the fiscal 2009-10 results.. PAT Margins were in the range of 11 to 17 per cent during last 5 fiscals. ROCE was 33.64 per cent and ROE was 28.82 per cent in 2009-10..
Those who had the gifted foresight to pick up a ‘Z’ listed company like GRRPL which makes saleable products from scrap way back in May 2004 @Rs.64/share may perhaps be sitting like a Prince/Princess on a 16 bagger!
In short, you will need Lady Luck to be by your side for months or years at a stretch if you were ever lucky to spot a potential multibagger languishing in Z category.
By no means am I suggesting that you should buy Z category stocks which could be delisted to your horror after taking a call on the same – so, staying away from Z category stocks is a prudent decision. But, exceptions are always there.
No matter how good a company maybe, we at HBJ Caps would not look at companies listed under Z category but we could certainly re-vist the company if the business models appear to be as good as the ones that’s just covered..
After all one needs to be careful when dealing with this ”stock market” monster and in this world of stocks and scams, if companies can rise from the ashes they can also tumble from heavenly glory “Enron” style!
Wall Street or Dalal Street – you can find smart folks out there who know how to make money even from the depths of the ocean and crust of the earth! Do you have the courage to put on the shield of risk on your chest and the badge of fortune on your sleeves and go onward and forward to take the markets head on with the grit and determination of emerging victorious with the trophy of wealth and prosperity that is beckoning you every day, day by day. Come on, wake up, Sid or whatever your name is and just do it! Start investing now in the great Indian story if have never done it before. And when in doubt about victory or defeat, just call us and we’ll be honoured and delighted to help and guide you.
Kishor S. Khot, [Kishor@hbjcapital.com], Equity Strategist, HBJ Capital Services Pvt Ltd
