Just like any other day, we were scanning through some charts amid the gloom and doom of the market, we spotted a stock making a stupendous move from entertainment industry mostly into owning IP of vast music library and film production. Stock was at its ATH. The name of the stock may sound like it is some tip, Tips Industries. On closer look at chart it looked like 19 years old level of 183 was broken yesterday(01 Sep, 2020) and it came to our radar on 02 Sep, 2020. The price was 215.
Have a look at this chart –
The stock was a buy on 22 June when it crossed its pre covid level at 134. Of course, we did not know back then if Tips was even listed. Again on 01 Sep when it broke out of 185 levels after the retest. 02 Sep was the perfect entry point as per our set up of ATH theme having strong fundamental stock story. That is when we put a broadcast message on this –
Now let’s see basics of the stock –
Investors who are obsessively focused on value which often tends to relate with buying more and more at the bottom will frown over such opportunity because stock has just become 4-5x in 1 year. Since we do not follow the dogma of value investing it does not trouble us.
Some data points –
1. 51 employees, founded in 1975 and run by Taurani family.
2. 25000+ songs in genre of bhajans to remix, 6M followers on Facebook, 1M followers on Twitter and 30M subscribers on YouTube.
3. Falling data rates, cheaper smartphones and wide gamut of streaming platforms and entertainment going digital augurs well for the company.
4. Company is planning to produce 2-3 films a year.
5. Paying subscribers for music in India are quite low(~1%) and they are expected to grow to 2-3% which will help the company.
Debt free, promoter holding 75%, 15%+ ROCE, revenue affected in near term due to less advertising spend because of Corona, last year Free Cash Flow of 29 Cr and company is trading with market cap of 360 Cr. Chart is suggesting good fundamental news will start flowing in.
Mentioned at 215 and in 8 days stock is now up by 28% in such a chaotic market and now trading at 276. One can always be wrong in the market, and in this stock that point is closing below 194.
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TIPS has been on my watchlist for a long time. But it doesn’t give a chance to enter, each day it opens and gets locked in 5% UC. It opened with 5% UC even on a day like today – 100+ points gap down on Nifty. By the time it opens they may start dumping on retailers.
Someone will have to lose money for others to make. That is not some conspiracy but incompetence or lapse in a moment by people active in the market. Happens all the time. That is why one has to know what they are doing and what are their expectations. Learning rule and following them is important for this reason alone.
So forget what might happen to retailers. You are no retailer. You know as much or probably more than the big and smart money. You are competing with all of them to make better gains. Shed the mentality of operators, retailers and all. Price action should be used, SL should be defined, trade should be planned and then executed to best of your ability. This much is on you and if you still fail then it simply means others are better and it is not for you.