As Warren Buffett says, the promoters know what their business is worth. I am beginning to feel that the promoters do not have much confidence in their business and so they are diversifying their stake. Of course, they still hold more than half of the business but such heavy reduction in holding in such a short time suggests that they believe the business is reasonably priced or overpriced.
Now, I think it makes more sense to invest in many other businesses which have good balance sheets and are still available cheap.
When energy prices were soaring due to high oil and gas prices, then Suzlon was riding high with orders. But now that the worldwide economy is slow, oil and gas prices have dropped considerably. This has obviously hurt Suzlon's business prospects. They went in for acquisitions while the market was hot (and expensive) and now they're paying the price during the slowdown. Meanwhile, larger competitors with deeper pockets, like GE, have been investing in newer and upgraded technologies:
2 comments:
Hi Rajeev,
This is regarding Suzlon. In the last 1 year the promoter holding has come down significantly. See this link:
http://money.rediff.com/companies/suzlon-energy-ltd/15130070/share-holding
Again, the prompters have sold shares last week :
http://www.business-standard.com/india/news/suzlon-offloads-45-stake/74136/on
http://economictimes.indiatimes.com/markets/stocks/stocks-in-news/Suzlon-Energy-promoters-raise-Rs-678-cr-from-45-stake-sale/articleshow/5048693.cms
As Warren Buffett says, the promoters know what their business is worth. I am beginning to feel that the promoters do not have much confidence in their business and so they are diversifying their stake. Of course, they still hold more than half of the business but such heavy reduction in holding in such a short time suggests that they believe the business is reasonably priced or overpriced.
Now, I think it makes more sense to invest in many other businesses which have good balance sheets and are still available cheap.
When energy prices were soaring due to high oil and gas prices, then Suzlon was riding high with orders. But now that the worldwide economy is slow, oil and gas prices have dropped considerably. This has obviously hurt Suzlon's business prospects. They went in for acquisitions while the market was hot (and expensive) and now they're paying the price during the slowdown. Meanwhile, larger competitors with deeper pockets, like GE, have been investing in newer and upgraded technologies:
http://www.technologyreview.com/energy/23517/
Suzlon could soon see itself outpaced by more powerful rivals in a fickle market.
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