While it may sound a little crazy, the next problem, and a very new one for India, is deflation. India has always had the Hindu Rate of Growth, whatever that means, which was some 3% growth forever.
Here's a link to add: Edible oil imports jump 19% on lower global price.
Palm oil and other edible oils had their duty slashed in 2006, but in July 2008, prices were at a major high. A report from Bloomberg mentioned that "India's edible oil imports in May fell 39 percent to 302,345 tons from 494,184 tons a year earlier, after private traders cut inventories of the commodity because of local government curbs on stockpiling".
How four months can change an industry. From then, to November, when world prices are hitting lows and imports scaling up - and no doubt, local industry is worried that their already high price points cannot be defended.
Like every industry they will go into denial first - refusing to cut their prices and asking for import duty hikes. (Which btw, are not going to be possible if we ink FTAs with Malaysia and Indonesia, planned early 2009) But later, reality will set in, and voila: Deflation in edible oil prices.
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>Hi. Deepak,
Now Northgate is at 63 to 68. is it right time to add to portfolio for long term?
This company is in growing sector(Internet). and debt free and posting 30% growth.,low PE , good devident……..
11.15.08 at 8:21 AM
>They’re not debt free! They already pay an interest, and have just said they may take loans and FCCBs upto 500 cr. each!
Growing sector? Internet? :)
There’s no 30% growth mate. EPS went from 11.32 to 12.59 for the half year (consolidated). That’s about 10% growth.
Insider sales have stopped, though. Thank goodness. But the share price is at a huge low – what a massive fall! I wouldn’t recommend – let it recover to at least 150 and tehn you can see.
11.15.08 at 11:22 AM
>With falling edible oil prices, I guess there is a strong case to short KSOILS as it still commands a valuation of 1400 crs and a p.e. of 13. I think there shall be a strain on profitablity of processing cos and edible oil marketting cos of India.
Kindly comment.
11.16.08 at 8:06 AM