Nikhil Kale - - Team MoneyWorks4me
We had found a solution to make investing more profitable and not a game of mere chance. Not only did we find the intrinsic value ( MRP, as we like to call it ) for individual stocks but we had also done the same for the benchmark index – the Sensex. So, once our excitement and joy, which had reached stratospheric levels, subsided to more normal levels, we got back to business. The next big step was to tell EVERYONE about this. But first we had to get some experts to look at it and give their opinion.
We approached the folks at Outlook Profit – a magazine which is very closely aligned to our philosophy of investing. They knew about the problem that investors face in the market; they usually buy and sell at the wrong price, ending up suckers. And our idea, Stocks@MRP and Sensex@MRP, could help them make better decisions. They looked quite interested but also had their doubts. A lot of questions followed, most of which we answered. In the end they suggested that we backtest it, which basically meant finding Sensex@MRP for the past. That could help us verify whether it actually worked. That sounded quite reasonable and easy to do but little did we know….
A period of 5 years for backtesting. Sounds easy? Imagine this: 5 years are made up of 20 quarters. So, we had to find 20 Sensex@MRP values. This required finding the historic intrinsic values of the 30 companies making up the Sensex. That makes it 600 values! To add to this, the composition of Sensex keeps on changing. This meant analysing financials, crunching numbers and finding various parameters which determine the intrinsic value and the Sensex. We took a minute to relax, took a deep breath and then dove right into the sheets and sheets of data.
We worked day and night. By day, we crunched numbers with a ferocity never seen before and analysed them till our heads started aching. By night, we watched movies like Rocky (the one with Sylvester Stallone not Sanjay Dutt), Lakshya and Lagaan! We were determined to crack it. And finally we succeeded! Days of hard work paid off and we got the results. And the results were as per our expectations. Sensex@MRP worked. For the entire duration from 2005 to 2010, Sensex@MRP gave clear signs when to buy and when to sell. We mailed the results to Outlook Profit, excited as ever.
They responded: ‘The results are quite good. It seems to work well for the period 2005 to 2010. But you know what, Indian companies shifted gears sometime in 2003. Till 2003, most companies were facing a tough time growing. Could you go back and test it till, say 1999? This could help us verify whether it works even during times of low earnings growth.’
We were stunned for a moment. Just what we wanted. More backtesting! More data crunching and analysis! Yes, it meant more work, but we knew the results would only make the solution even better. It would turn ‘The Great Idea’ into ‘The Incredible Solution’. And after few more days of hard work, we got the results which reaffirmed our belief. Sensex@MRP and Stocks@MRP can help you, no matter what the time and the scenario. The folks at Outlook Profit were finally satisfied with the result. Infact, they were more than satisfied. They agreed to include this story as a ‘Profit Special’ article in their magazine.
Yes, you heard it right. We told you this was big! Outlook Profit’s latest magazine, which hits the stands in a couple of days, features our story titled as ‘The right price’ (starting page no.46, to be more precise). The article gives you an in-depth analysis of how Sensex@MRP and Stocks@MRP were calculated and how it can help you take wiser investment decisions. Most importantly, it tells you what is the current intrinsic value of the Sensex and some of the top companies and whether you should buy or sell them. So what are you waiting for? Grab your copy now. That’s not all! Log on to MoneyWorks4me.com where you can get the MRP for all the listed companies worth valuing.
You may have burned your hands in January 2008 when the markets crashed and may have missed the bus in March 2009. But get your hands on this story and we are sure, you won’t miss any opportunities in the future. Make sure you do not miss reading our story!
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Team-MoneyWorks4me
Aliya Sayyed
It may be fine if the data is updated on regular basis. I find many companies below MRP, but does not make sense to buy because the data is old in your analysis. 10 year X ray is not updated till audited results are declared. Similarly, Stock@sensex is not updated. It means your decision can go very wrong, if you do not take into account the latest unaudited results or other news which is already known to market.
Gahlaut RPS
The MRP calculation is not based on old data but is calculated considering the latest TTM EPS and hence holds. Similarly Sensex@MRP is also updated on a quarterly basis. The 10 YEAR X-RAY requires the audited results since BVPS, ROIC and Debt to Net Profit calculations depend on balance sheet items which are not given out on a quarterly basis. Having said this, the unaudited results are put up in the Future Prospects page as well as the Company Pulse report as soon as they are released.