Ajit Mishra, Vice President, Research, Religare Broking, answers readers' queries on a weekly basis.
Here are his replies to some of the 'buy, sell, hold or avoid?' emails that we have received.
If you want his advice on what you must do, please mail your questions to firstname.lastname@example.org with the subject line, 'Stock Market Query', along with your name, and Ajit Mishra will offer his unbiased views.
Illustration: Dominic Xavier/Rediff.com
Neeraj Srivastava: How much growth can be expected in 1 month in GAIL & IOC. I bought them @ 150. also I have Grasim @ 851, Bajaj Finance @ 3450 & Tata Steel @ 497. Please tell how much should i wait for them?
- GAIL: From last couple of months, stock is in intermediate downtrend. Stock witnessed a crucial support around 120 zone, which halted the previous fall. Stock may test 150-mark in medium term as this is the crucial resistance zone.
- IOC: Since October 2018, stock bode well between 170-mark on upper side and 125 on downside. Currently stock is hovering around the lower boundary of zone. Stock may trade with mild positive bias in near-term.
- Grasim: Reduce. Debt to equity ratio of the company is high at 1:3.
- Bajaj Finance: Continue to hold for long term. Company’s financial performance has been encouraging. In the latest quarterly results, company reported loan growth of 29 per cent and asset quality was also stable.
- Tata Steel: The stock has been under-performing because of lower steel prices globally. The company has high debt and operating margins have also declined which resulted in lower profits. Hence, we would advise to exit the stock on rise.
Ibraheem: I am an investor of small caps and micro caps for long term basis, say 2 to 3 years time frame. Now I have the following stocks:
1. Amarjothi Spinning: 1000 @ 85.00
2. Dalmia Bharat Sugar: 1500 @ 88.00
3. Jiya Eco Products: 3000 @ 48.00
4. Ruchira Papers: 5000 @ 45.00
5. T & I Global: 5000 @ 65.00
Please advice about the stocks whether I can hold them for another 1 year to get 30 per cent upside
- Amarjothi Spinning: Exit. Revenue growth has been largely stable since last 5 years while operating margins and profit have declined during the same time.
- Dalmia Bharat: Exit.
- Jiya Eco Products: Partial exit. The recent correction in the stock price was because of poor standalone quarterly results wherein operating margins declined by 3 per cent. However, the revenue growth was 35 per cent which led to 14 per cent higher profits.
- Ruchira Papers: Exit, the financial performance has not been encouraging.
- T & I Global: Exit. The company has been reporting negative operating margins for the last two consecutive quarters.
Bhavik: Could you please give your opinion for following stock which I am planning to invest in?
- Simplex Infrastructure
- BGR Energy
- Texmaco Rail
- Titagarh wagon
- Trident ltd
Will be looking forward for your advice on these stocks.
- Simplex Infrastructure: The company has high level of debt. Recently, rating agency CARE revised the outlook on company’s NCDs and long term bank facilities to negative owing to the poor working capital cycle. We would not advise to invest in the stock. However, if you still wish to invest in infra sector you can look for L&T which is a comparatively safer bet.
- BGR Energy: The company has poor return ratios (RoE and ROCE) and high debt/equity ratio (1:6). We would not advise to invest in the stock.
- Texmaco Rail: Avoid. The company has poor return ratios and negative cash flow from operations.
- Titagarh wagon: Avoid. The company has been reporting frequent losses.
- Trident Ltd: Avoid. Operating margins have been declining for the last three years.
Vilas: I have shares of IDBI Bank purchased at Rs 130 per share. At present
shares are trading at Rs 28 per share. Please advice me what to do.
On 18: 12: 2018 LIC had proposed to purchase IDBI shares from existing share holders at Rs 61.73 per share. When is this going to happen?
Ajit Mishra: It seems this has already happened. Suggest you exit if bought only for this reason.
Mamidela R Suresh: I am holding 240 shares of Berger Paints since 1 year. Can I sell/hold keeping in view of market fluctuations?
- Berger Paints: Hold. Likely to test 400+.
Zeeshan: How good is KRBL? I’m looking ahead for investing in it and also in ZEEL, Radico Khaitan, Rain Industries
- KRBL: Financially the company’s performance is positive. However, ICRA has downgraded its ratings on the company’s long term bank facilities considering the director’s involvement in a bribery case. Hence, we would advise to avoid investing in the stock unless this matter is solved.
- ZEEL: As of now we would advise not to make any fresh investment in the company considering the uncertainty pertaining to debt reduction by the promoter group.
- Radico Khaitan: The return ratios and valuations are not attractive at this point in time. Hence, it’s better to exit.
- Rain Industries: Avoid. Debt/equity ratio is high and operating margins have been declining.
Virender Singh: have shares of Lupin (500 @ 1240 (average) ), BHEL ( 2500 @ 71 (average)) & ITC ( 250 @ 277).
Please advise, if I shall remain invested or sell these stocks. If yes, then what should be my target?
- Lupin: Exit on rise. The company’s recent quarterly result was good. However, the company is prone to regulatory changes and inspection.
- BHEL: Exit on rise. The company’s order book is strong however the return ratios are poor.
- ITC: Hold. The recent result has not been very encouraging with cigarette volume growing below the estimates. However, we have a positive view on the stock from a long term perspective.
Anish Dasgupta: I am holding shares of FSL (Firstsource Solutions Ltd) for the last one year at Rs 72. It’s price is not increasing. Kindly suggest.
Ajit Mishra: We would prefer L&T Infotech over FSL.
Surya Prakash Thutupalli: Your views on the present prices and future of the following stocks please:
- FIEM Industries
- OIL India
- Aster DM Health Care
- Tata Motors
- FIEM Industries: Considering the ongoing auto slowdown, the stock is likely to under-perform in the near term.
- GPPL: Revenue and profit growth over the years have been largely stable and not very encouraging.
- OIL India: Hold, fundamentally sound with healthy dividend yield.
- Aster DM Health Care: Exit, the financial performance has been muted for the company.
- Tata Motors: The domestic auto sector has been witnessing a slowdown since a year now. This has resulted in ~39 per cent decline in the June PV sales of the company. Further, JLR story has not yet turned out to be positive for the company. Hence, we would advise not to make any fresh investments in the company.
Periadurai: I have the following stocks in my portfolio:
- Graphite India: 255 @ 524 (since December 18)
- BEML: 200 @ 865 (Since March 19)
- Tata Motors: 221 @ 303 (Since april 19)
- Yes Bank: 450 @ 143 (Since march 19)
- Arvind: 250 @ 68 (Since June 19)
- Federal Bank: 150 @ 107 (Since July 19)
- Sail: 250 @ 55 (Since April 19)
- Ashok Leyland: 200 @ 84 (Since June 19)
- Hind Petro: 100 @ 317 (Since may 19)
- Coal India: 350 @ 245 (Since March 19)
- IB Real Estate: 100 @ 116 (Since June 19)
- Tata Elxsi: 50 @ 745 (Since July 19)
- UFO: 150 @ 216 (Since may 19)
- URJA BE: 200 @ 2.85 (Since july 19)
- RCom: 1000 @ 1.75 (Since july 19)
- RVNL: 300 @ 27 (Since March 19)
- Graphite India: Exit. The company reported excellent set of numbers in the previous fiscal. The same is unlikely going forward because of the lower demand from China and softer graphite electrode prices.
- BEML: Exit
- Tata Motors: The domestic auto sector has been witnessing a slowdown since a year now. This has resulted in ~39 per cent decline in the June PV sales of the company. Further, JLR story has not yet turned out to be positive for the company. We would advise to stay invested only if you have a long term investment horizon of at least 2-3 years.
- Yes Bank: Hold.
- Arvind: Exit. The company has high debt levels.
- Federal Bank: Hold.
- SAIL: Exit. Financial performance has not been good. Prefer Tata Steel
- Ashok Leyland: The company has reported ~31 per cent decline in its sales volume in June. The shift towards BSVI will also affect the sales volume going forward. However, notwithstanding the near term pressures we have a positive view on the company from a long term perspective.
- Hind Petro: Hold.
- Coal India: Hold.
- IB Real Estate: Exit.
- Tata Elxsi: Hold. The company is fundamentally sound.
- UFO: Exit. Margins have been declining while profit growth is largely stable for the last four years.
- URJA BE: Exit. Penny stock with low return ratios.
- Rcom: Exit.
- RVNL: Hold. Revenue and profit growth has been good.
Pradeep Soni: Please give me your advice on the following stocks in my portfolio. Can these be held for long term?
1. Gujarat Alkalies and Chemicals
2. Salzer Electronics
3. IOL Chemicals and Pharmaceutical
- Gujarat Alkalies and Chemicals: Hold. Fundamentally sound.
- Salzer Electronics: Exit.
- IOL Chemicals and Pharmaceutical: Hold. Fundamentally sound.
Chandravadan Jani: am holding 'Bayer Crop Science @ Rs 3253, MMTC @ Rs 20.50 and Quess Corporation @ Rs.459.
All are going down. What should I do? Hold it for more time?
- Bayer Crop Science: Exit. Revenue and operating margins have been declining.
- MMTC: Exit. Poor return ratios.
- Quess Corporation: Hold.
Rolls Robin: I am holding shares in Manappuram Finance for 116 and ITC for 266. Will it go high or low in the coming weeks? Kindly advice whether to hold it or not. Your kind support is highly appreciated.
- Manappuram Finance: Hold. Fundamentally sound. Asset quality has been improving.
- ITC: Hold. The recent result has not been very encouraging with cigarette volume growing below the estimates. However, we have a positive view on the stock from a long term perspective.
Raj: am holding following shares of
1. Vakrangee @37
2. 8K Miles @ 56
3. Vidhi Specialty Food Ingredients Ltd @ 61
4. BLS International Services Ltd. @ 198
- Vakrangee: Exit. Negative operating margins for the last three quarters.
- 8K Miles: Exit.
- Vidhi Specialty Food Ingredients Ltd: Exit.
- BLS International Services Ltd: Exit. Operating margins have declined.
Darpan: Dear Sir, I will be sincerely thankful if you kindly advise whether to buy the following stocks with a time horizon of 2 years.
- Motherson Sumi
- HDFC Life
- IDFC First Bank
- Aurobindo Pharma
- Ambuja Cement
- YES Bank
- Motherson Sumi: The stock has nearly fallen 50 per cent in the past 1 year. Considering, the ongoing auto sector slowdown further correction cannot be ruled out. Hence, we would advise not to invest in the stock as of now.
- HDFC Life: Buy. The stock can give healthy returns over 2-3 years.
- IDFC First Bank: Avoid.
- Aurobindo Pharma: Buy. The stock can give healthy returns over 2-3 years.
- Ambuja Cement: Buy. The stock can give healthy returns over 2-3 years.
- SBI: Buy. The stock can give healthy returns over 2-3 years.
- YES Bank: Avoid. The quarterly results have not been very encouraging. However, a view 3-4 years then one can invest.
Uma Dhar: I am holding IOCL bought average @ Rs180 and ONGC bought average @ Rs 170. Can you advice regarding its fundamentals and technicals as to how long should I hold it please?
- IOCL Since October 2018, stock bode well between 170-mark on upper side and 125 on downside. Currently stock is hovering around the lower boundary of zone. Stock may trade with neutral to mild positive bias in near term.
- ONGC Stock witnessed a fall of more than 30 per cent in last couple of month’s session. Currently stock is hovering around its crucial support zone i.e 125-127. Price pattern and indicators suggests stock may trade with mild bullish bias in near term.
Both companies are fundamentally sound and have healthy dividend payout ratios. One can hold the stocks.
Nilesh Dave: Please advise good Nifty companies available at attractive valuations. I invest mostly in large cap stocks.
Ajit Mishra: You can invest in the following companies with an investment horizon of 2-3 years:
- FMCG: Britannia, ITC
- IT: TCS, Infosys
- Automobile: Maruti Suzuki, Eicher Motors
- Banks: HDFC Bank, ICICI, Axis Bank
Deepak Gala: Advice long term investment (about 1 year) for Orient Paper & Industries.
- Orient Paper & Industries: Hold. Operating margins have been improving post the demerger.
Nivrutti Parab: What is the future of Yuken and IDFC Bank? Kindly advice.
- Yuken: Exit.
- IDFC First Bank: Avoid. The bank has been reporting losses for the last two quarters. Asset quality also deteriorated on QoQ basis.
Sharad Ghavate: I am a small investor, I have 50 shares of DCB bank purchased in July 2019 @ Rs 199 per share. Please advice if I shall hold or sell the same?
- DCB Bank: Exit. Asset quality has deteriorated.
Nitesh Sheth: I had purchased stocks of TNPL for 336 now it is 154. Will TNPL stock go above 300? Also, purchased stock from Lemontree which is 54 now? Will this stock also go up to 90 by end of this year?
- TPNL: The financial performance has been dismal. Recommend to exit.
- Lemontree: Exit. Return ratios are poor. The company has high level of debt and promoters have pledged their holdings.
Venkata Prasad: I have invested in these stocks after correction from last 3: 4 months but still they are down by 10: 80 per cent. I am a long time investor and can wait 5: 7 years. Please suggest if I can average it or hold it or exit after some time.
- Apolo Tyres: 25 per cent down: Can average
- Dilip Buildon: 21 per cent: Avoid
- Sun Pharma: 12 per cent: Hold
- Wockhardt Pahrma: 30 per cent: Hold
- Granuels: 5 per cent: Exit
- Cadila: 30 per cent: Hold
- Aurobindo Pharma: 20 per cent: Hold
- Natco: 30 per cent: Hold
- Yes Bank: 70 per cent: Can average
- Tata Motors: 60 per cent: Average 50 per cent and hold for more than 3 years
- Sterlite Technology: 40 per cent: Exit
- M&M: 10 per cent: Average
- Godrej Consumer: 10 per cent: Average
- Finolex Cables: 25 per cent: Average
- AB Capital: 20 per cent: Exit
- Cyient: 15 per cent: Exit
- Ashok Leyland: 30 per cent: Average. It is a cyclical stock so exit after healthy returns
- Exide Industries: 10 per cent: Average
- HCC: 35 per cent: Exit
- PNB Housing Finance: 40 per cent: Exit
- Rain Industries: 25 per cent -Exit
- Manpasand: 80 per cent: Exit
Paromita Sett: I HAVE PURCHASED HDFC BANK 40@2310 AND INDUSIND BANK 80@1382 IN JUNE-JULY'19. Shall I HOLD OR SELL? IF YOUR ADVICE IS HOLD THEN HOW LONG AND WHAT COULD BE THE TARGET PRICE?
Ajit Mishra: These are fundamentally sound companies and can give you healthy returns over the next 1-2 years. Hold.
Akshay Parikh: What is your fundamental view on Navkar Corporation? Can I buy at CMP@ 20 for-2-3 years? Can it be a multi-bagger in 5 years?
Ajit Mishra: No, the financial performance has deteriorated. Its better to exit.
Mohit Mahajan: Please suggest regarding following stocks I have in my portfolio. I am ready to hold these for long term if fundamentals are good:
- Force Motors: Exit
- Waterbase: Exit
- Aditya Birla Capital: Can hold if having a view of 2-3 years
I had invested in Force Motors at the level of Rs 2500. However it is trading at Rs 1100 now
Ajit Mishra: The overall slowdown in auto sector has led to correction in the stock. The stock would see some recovery as and when there is revival in the sector. However, we would prefer that you invest in names like Maruti, Ashok Leyland and M&M.
Rajesh: I had invested in Waterbase at the level of Rs 160. Now trading at Rs 90. Please guide whether there is short term pain in stocks or there is some issue with fundamentals.
Ajit Mishra: The financial performance has been adversely impacted due to slowdown, hence its better to avoid.
Dr Dileep Kulkarni: I have following stocks with me. Kindly opine what to do?
- BHEL 80 @120: Exit
- GABRIEL 50 @160: Prefer Subros
- NCLIND 70 @190: Prefer Ultratech, Birla Corp
- STRTCH 170@245: Exit
- Maruti 5 @ 6630: Hold
Alhad Sabadra: I bought 100 shares of Cox and Kings @ 40. Is it wise to average it by buying 1000 shares @ 10? Or to wait further for buying? Or book loss? Please guide.
Ajit Mishra: The debt levels are high. Further, the competitive intensity in the sector is also high. Hence, we have seen the underperformance of the stock. It’s better to exit.
Kamal Kalra: I would like to know your advice on the following shares in my portfolio: Tide Water Oil Company 15 shares bought at average price of 6435 and Sukhjit Starch Chemicals Limited 750 shares bought at average price of 244.
Ajit Mishra: The business growth has been subdued over the last 3-4 years. Further, the operational performance has also peaked and the margins are deteriorating. Hence it is better to avoid the stock.
The financial performance has been promising for the company. However, being a small cap company we would recommend to partially exit the stock.
Binod Kumar: I have 5000 shares of NCC @100. CMP is 71. Should I average by buying more? What are the prospects of NCC from medium/long term perspective?
I also hold 6000 Aditya Birla Capital @198. CMP is 80. Should I average? What are medium/long term prospects?
Please provide your expert opinion.
Ajit Mishra: Your answer:
- NCC: The sector itself has been facing issues due to slowdown and NBFC liquidity crisis. Hence, given the current scenario it is better to exit the stock.
- AB Capital: The industry itself is highly cyclical, hence if one has 2-3 year view, we would recommend to average at CMP, and hold for at least 2-3 years.
Harsh Bhayani: I wants to know future of Vakrangee, Monte Carlo & Eclerx.
Ajit Mishra: The financial performance has not been good for the above companies. Hence it would better to avoid/exit the stock.
Bikash Kumar Padhi: What are your views about CYIENT and TATA COFFEE for 2-3 years down the line?
Ajit Mishra: We would not recommend the above stocks.
Shyamal: I am stuck with Corporation Bank; is it advisable to convert it to First IDFC Bank or get out altogether? I have Educomp Solutions & Everonn Education; any prospects for improvement or sell them?
Ajit Mishra: We would recommend selling all of them.
Prashant Sanghvi: I hold 100 shares of Lupin bought @ average price of Rs 1100. I have held them for last 1.5 years. Should I hold further or exit? Kindly advise.
Ajit Mishra: The overall pharma sector has been under stress due to regulatory hurdles and pricing pressure. Lupin has also faced similar challenges. There are signs of some easing however, if you have 2-3 year view then only hold the stock or else exit.
Sudhir Waikar: I have bought 40 shares of Maithan Alloy Ltd @ 616 each. Now its price is 430 per share and 193 shares of Phillips Carbon @ Rs 160 each and its price is Rs 118 each. Please help what can I do. Shall I wait for recover loss? I can hold it till loss is recovered.
Ajit Mishra: Both these stocks are highly cyclical in nature. Further downside cannot be ruled out as on-going economic slowdown is likely to weigh on commodity prices. Hence, it would be better to exit and focus less cyclical sector like Auto or FMCG.