Investment Idea In Small Cap Stock(11-6-14)

Investment Opportunity: Gujarat  Foils  Ltd. 

Industry: Aluminium and Aluminium Products

Horizon: 9 to 15 months

( BSE Code: 531410)

Last closing price (11-06-2014): Rs.42.35 (+2 ­  4.96%)

Price Background: The all-time high for the script which is Rs.150 was made on 14-8-2008 and all-time low of Rs. =25 was made on 2-6-1997. Low for year 2013 was Rs. 21/- which was made on 18-11-2013. The low for year 2014 (as on date) is Rs.27 made on 1-1-2014.

Fundamental: The Company has posted good financial results for the year 2013-14 giving an EPS of Rs.11.22 against Rs.7.36 for the year 2012-13. The sales for the current year stood at 429 crores against 344 crores for the year 2012-13 a rise of 24.70%. despite good result  the company has not declared any dividend which is surprising, however  at the current rate, the stock is at very low P/E of 3.77. Therefore, I feel that the stock has good potential to move up.

Technical: Technically the stock is nicely poised for a good rise.

Recommendation: I expect a return of 50-100 % in 9-15 months. I therefore recommend investing at least 50% of the marked fund for the script at the current level and then suggest buying on dips. Kindly be alert if the stock price goes below 40.55 and stays at that level. Please get out of the stock if price closes below 30.90. 

P.S. Kindly note that make your cost your stop loss in favorable trade and then trail it as the price of the stock moves up to gain maximum profit.

Note:

1.    Price stated here is of spot market

2.    Recommendations are valid till the stop loss is triggered

3.    In favorable trade trail your stop-losses for maximum gain and capital protection