My personal history with the stock is below. I started investing in the June-july time frame and had an average cost of around 182 Rs/share. I sold at an average price of around 315/ share resulting in an annualized gain of around 75%.
I later read mohnish pabrai’s book – Dhando investor and also read some lectures by professor bakshi and have expanded my investment approach to buy and hold and to graham type stocks (which I sell once they reach 90-95% of intrinsic value). So the next time around when the stock approached my estimates of intrinsic value, I offloaded it completely this time.
Coming back to the issue of whether it was smart pick. The company is trading around intrinsic value, so it is tempting to claim that I was right. Frankly I am not sure. I also agree with prof bakshi’s comment in his interview that if the corporate structure is flawed, wherein the hidden value will not be unlocked, then such ideas are value traps. I have seen several such stocks where the investments in group companies makes them look undervalued. However I am wary of investing heavily in such stocks.
Final note: I did my personal analysis in june-july and posted it in oct 2006. So please do not blindly follow my suggestions when I publish them. I would suggest that you should do as I do on such stock analysis by bloggers. There are a number of like minded bloggers I read regularly. Whenever they discuss a stock, I make it a point to analyse it myself. I may not agree with the analysis eventually, but I know for sure that blogger has done some analysis and if it has passed his screens, it is definitely worth looking at closely.