Oct 22, 2014

Just something about Contingent Liabilities: Stock Investment

Contingent Liability is a liability company meet when particular condition is met. It is not a must to spend but situation can arise when company need to honor the liability. Because it is not fixed on time, it is not expressed in balance sheet as permanent column but mentioned as star mark in balance sheet. Investor need to check this fine line as this amount could be huge and if company need to pay this then this can affect company's result.

Contingent liabilities can be legal penalty company may need to pay, contract not meet, product recall (automobile companies do this time to time), and similar.

Contingent liabilities are compared with Sales/Revenue. Like Contingent liabilities is 10 percent of sales.

Contingent liabilities is like a time bomb which can dent company's balance sheet. So, careful and do not ignore it.

To find the reason of contingent liabilities, check Annual Report of the company. It can be probable, reasonably possible or remote. Remote means there is less chance company may need to meet the liability. Probable is high chance that company need to meet the liability. Reasonably possible falls in between.

Stock Price and Contingent Liability

Contingent Liabilities classification
Oct 21, 2014

Few Stocks for Diwali: Value and Growth Stocks

Few top quality stocks are coming again and again from different quarters of good investors and PE house. I am mentioning here so that you can pick any based on your liking and portfolio mix. These all are very good quality stocks and can be a multibagger. These stocks are coming to my mind from time to time because of its quality and recommendation from many quarters.

Meghmani Organics,
RS Software,
SKS Microfinance,
L & T,
L & T finance,
LIC housing finance,
Capital First,
Caplin Labs,
Suven Life,
Kaveri Seeds,
Can Fin Home.
TV Today,
HDFC Bank,
SBI Bank.

If you are missing Automobile stocks then leave SBI and add HeroMoto or TVS Motors. Eicher Motors can also be a good pick.

There are many other quality stocks but this list is comprehensive enough and can be a good mix based on domestic play. These all are high quality and result oriented stocks. All can be left for few years based on Indian Economy recovery till uptrend last. Few stocks like Kaveri seeds, Caplin Labs, Suven Life and RS software are not very dependent on domestic play. So, if you are new to investment and just want to build your portfolio then you can choose a good mix from here.