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Stocks to watch: Mastek, RNRL
Published on Thu, Jul 24 at 16:32 , Updated at Fri, Jul 25 at 11:48
Source : CNBC-TV18
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On Mastek:
The company has met 15 out of its 17 guidances. It has a robust order book of around Rs 450 crore and its Return On Equity (ROEs) are very compelling. The stock is available at around 4.5-times forward earnings. There is a bit of comfort in its ROE valuation outlook. It’s a small midcap pick. It should deliver good returns over the period. On IPCA Laboratories: IPCA is trading at around 6.5-times forward earnings and historically it has traded around 10-times. It is going into new geographies where margins are higher and it is setting up a new plant there. Return On Equity (ROEs) are going to move up, if it even moves back to its historical PE multiple, things are going to look good. The domestic pharmaceutical space is a little more resilient to the overall macroeconomic environment. That gives us a comfort factor. These companies ( Pharma companies) have depicted a consistent growth over a longer period of time and that protects us on the downside and gives us reasonable optimism over the upside.
Here is how he views the stocks on board:
On ONGC: ONGC would face resistance at around Rs 1040-1050 levels. Unless or until it decisively clears that level, I wouldn’t be bet on that stock. Whenever ONGC has a spurt on a particular day, the following day has never been very good. There may have been cases where ONGC has moved up for the 3 sessions in a row. But it generally doesn’t. I would closely watch the levels of Rs1040 or Rs 1050 on the upside and at the same time look at Rs 970 on the downside. Unless that breaks , ONGC might try to move up. Nagarjuna Fertilizers is doing very well. If one has to take a fresh position below Rs 36.75. If the momentum continues it can take it up to about Rs 41.50. So Rs 41.50 would be the next target. After that it may hit Rs 43 but Rs 43 is very strong resistance in my opinion where one will see a lot of supply coming in. On RNRL: RNRL has advanced so much in two days, that you cant take a long position. But that was the reason I did a buy call on RNRL. Unless RNRL falls below Rs 94 it can still try to move up and go to Rs 104 or even Rs 108. The crucial level for RNRL would be Rs 114 to about Rs 120. So if the momentum continues we might see it going to Rs 119 or Rs 123 .
Here is how he views the stocks on board:
On Crompton Greaves:
Crompton posted a very decent set of numbers. Its sales went up by 26%. The operating profit was up by 37.5%. All segments of the business seemed to be firing. Their power systems business and their consumer products business has seen a margin expansion. Power system comprises two-third of their business. The company has only seen a slight dip in the industrial systems business. The order flow expected over the next few years is high. Crompton is sitting on a good wicket. On Voltas: Voltas has an average set of numbers. Though Voltas’s topline is up, the operating numbers are almost flattish. They are up by about 6%. The Profit After Tax (PAT) numbers are up and inline with the sales numbers. The segment results show variations; the projects business is showing a dip in margins, whereas the unitary cooling segment is showing an uptick. Overall, there is a slight downward pressure on the margins but on the other side there is an increase in the order book and that is a good sign for any capital goods business. On Petronet LNG: Petronet this time was a miss. They didn’t do as much of spot cargo business as they usually do, Though the sales were up marginally by about 6%, the PAT witnessed a small dip QoQ basis. That’s about a 10% drop. But going forward Petronet’s expansion is coming through within this year. The increased regasified volumes this year should keep their results on track for the entire year. So I am quite okay with Petronet, though this quarter was a miss. |
The 5-day winning streak has finally snapped. The profit booking negated a strong start and the indices closed in the red. 
Harendra Kumar
Rajat Bose
V SwaminathanMessages on Mastek
Other comments
Mastek Ltd expects the US to account for almost half of the firm’s revenues in the next three years as the...
in Mastek - rvk41 at 31-Jul-08 07:44
Mastek Ltd has informed the Exchange regarding disclosure under SEBI (Prohibition of Insider Trading Regulations, 1...
in Mastek - MMB Messenger at 31-Jul-08 12:50
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Ajay Bagga
CEO , Lotus India AMC
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