My Best Pick 2017

Gaurav A Parikh

There is a potential for non-linear profitability if Ruby Mills gets to develop its surplus land and increase occupancy at 'The Ruby' tower

Published 5 years ago on Feb 03, 2017 8 minutes Read
Soumik Kar

With over 5,500 listed companies (though just 1,300 are traded daily) on the BSE and over 1,600 on the NSE, there’s always a problem of plenty — to ensure that you don’t end up being the next big sucker!

Hence, I can’t resist talking about my previous two picks that have done well. Shemaroo Entertainment, suggested as the stock for 2015 at Rs.159, has gained 140% to Rs.387, while Astec Lifesciences, recommended for 2016 at Rs.238, is up 160% at Rs.619, after touching a high of Rs.695. I hope, I can score a hat-trick with my pick for 2017. It would be really sweet as I’ve really stuck my neck out on this one!

This time we are talking about the Mumbai-based Ruby Mills, which will, incidentally, be celebrating 100 years in CY17. Could it give a 100% return from its current Rs.313 levels is what we are going to talk about.

Run of the mill
Cotton textile mills in the city, which had all turned sick in the 1980s, got a breather through the Development Control Rules (DCR) 1991 that allowed them to develop their real estate. But the 1991 DCR was quite a non-starter for most mills, as the factory structure could not be demolished. Except Phoenix Mills, which build a huge mall and entertainment zone within their existing structure at Lower Parel, others could not do much as there was no ready buyer or developer if the factory could not be demolished. The mills took the matter up to the Supreme Court, resulting in new DCR in 2001. 

It was around this time that I took a fancy to listed mill stocks — Ruby, Swan & Dawn — and showcased their hidden potential at asset valuation training workshops. The mills as per the rules were allowed to monetise their real estate, even by demolishing the existing structure, as long as 30% of the proceeds were earmarked for social purposes. 

The Shah family of Ruby Mills too decided to monetise the Dadar property. The textile division, comprising the entire spinning and weaving operations, was shifted out


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