Those who are in Alok Industries at current price as of august 29 , please get out!!!! this is not a kind of company which you could hold for long term expecting multiple returns. Forget about amount of debt, ROE,ROCE, profits growth which we look for when investing company. the sector itself is ailing, I see no light (fat profits) at the end of the tunnel for textile sector unless it develops new ground breaking product in the segment.
Reasons to get out ?
- Red flag for the textile industry : textile sector is heavily competitive and being ruled by unorganized players . there is no inflow of foreign direct investments. this sector has reached its maturity in India. you cannot make huge returns by hanging on to a company in textile sector. owners/promoters will make money but one cannot in the stock market.
2.So what if its acquired by RIL: when the news came that Alok Industries is acquired by RIL, the share price increased from 3 rs to 55 rs. this is best scenario for trading but not for long term wealth creation. If you participated in this rally, kudos to you but now its time to get out. shere are many companies RIL acquired in the past whose performance is quite bad in the long term. For example Hathway cables, whose price kept decreasing. this company is not even worth buying at or below book value. 5G will kill all the internet companies.
Reasons could go on like heavy debt, pathetic management, entry into unrelated sectors etc. This could be addressed by RIL, but you will not do justice for your money.