Desperate house calls for stock recommendations

Saw this article on Economic Times, and thought it made good sense in the current scenario. Read on....

It is that phase of the bull run when analysts are unable to justify the valuations of shares by conventional ratios. Nevertheless, stocks have to be sold to eager clients, and there has to be some ‘story’ or ‘fundamental’ hook to it. As the joke goes, if a stock can’t be justified as a good buy based on the traditional price to earning multiple, then market it based on its price to cash earnings multiples.

If it still doesn’t look cheap, try the enterprise value to operating profits (EV/EBIDTA) ratio. If that doesn’t work, look at the market capitalisation as a multiple of sales. If that too fails, point out the “embedded value” in the stock in terms of holdings in group companies and other investments. And if everything fails, the scrip can still be marketed as a “concept stock”, only for the discerning investors with a long-term horizon. But above all, get the client to buy it. 

Source:Economic Times

Broadband in India

Forbes India has a good article on Broadband in India in its recent edition.

For quite sometime now, a lot of industry experts and analysts have cited high pricing as one of the deterrents behind the low broadband penetration. High bandwidth pricing is no doubt one of the reasons, but there are other contributors as well

Local loop unbundling: In India, the last mile connectivity is controlled by the state owned operators, and unless the Government of India forces these companies to open up, newer operators will have to invest more money in last mile connectivity. Read more about unbundling here, and how OFCOM of the UK had opened up last mile access here.

Increased PC penetration:An increase in PC penetration would aid increase in broadband connectivity

Development of high quality, relevant, local content: The need of the hour is to develop more local content and deliver it on the internet. One of the segments is online coaching - especially for entrance exams like IIT and IIMs.

VoIP and new technologies: The Government should take immediate steps to legalize VoIP. Operators like RCOM, Bharti Airtel could consider delivering broadband through satellite - using their DTH platforms.

Click here for the latest subscriber numbers