Chat Transcript

30 Apr - 11:00 hrs

Vivek Mahajan | Head of Research, Aditya Birla Money

Smart trading strategies

Chat Transcript

guest: I bought 1000 shares of pidilite at 250/-. But the stock has been range bound for quite sometime.Advice for a medium term holding

Vivek Mahajan: Pidilite is the indirect play on rate cut story (due to its industrial segment) coupled with play on growing FMCG industry in India. Recommend to hold the stock with medium to long term perspective. The company has well established brands (Fevicol, Fevikwick etc) and has monopoly in majority of its product segment. It is trading at 21.1x FY15E earnings, which is relatively cheaper as compared to avg valuation of 25x for the industry. The stock has potential to deliver a 25% CAGR return over next couple of years

guest: HELLO SIR CAN I INVEST IN CALS REF IN CURRENT LEVEL FOR 5 YEAR PLZ SUGGEST ME

Vivek Mahajan: The markets are being driven by institutional (Mostly FII) flows. Moreover companies with governence issues, high debt on b/s and no business visibility r being totally shunned by the investors. Stocks like CALS with no clear business visibility SHOULD BEST BE AVOIDED. Protection of capital is more important at this juncture

guest: Can i short Nifty now and if yes positional stop loss and targets for it?

Vivek Mahajan: Though nifty has seen a strong upmove and seems due for a correction, with momentum strong it is advisible to wait for a reversal in prices before intitiating any short position.. initiate short below 5850, in which case you can put a stop above 5970..

guest: hello sir, how we maximize our profit during intraday

Vivek Mahajan: Cardinal principle of trading 1. Maintain strict stop loss 2. Be disciplined 3. Don`t be weak on margin 4. Identify strong momentum stocks - can either be buy or sell .. 5. Let profits run by using trailing stops..

guest: Sir , Is this the right time to accumulate Lanco Infratech stocks ?

Vivek Mahajan: Lanco has ~Rs.350 bn of debt with a debt-to-equity ratio of 5.13. Lanco Infratech has three highway projects, with a total length of 440 kilometers. Power and Roads both are not in good shape and require funds. Coal based projects constitute 63% and Gas based-34% of the total power projects. Most of them r stuck because of want of coal/gas linkage. Yesterday痴 settlement with Perdaman is the only silver lining for the company. There are better power stocks attractively priced at these levels like NTPC, NHPC etc. LANCO SHOULD BEST BE AVOIDED

guest: can I enter in TBZ & Union bank for 3-4 months.

Vivek Mahajan: Titan is the best play on jewellery industry, as the company belongs to Tata group and it has well established store network under the name of Tanishq (for jewellery), Titan and Fastrack (for watches) and Titan Eye+ (for eyewear). The company works on gold on lease model and hence is immune to any volatility in gold prices. wOuld prefer Titan over TBZ. Although, Titan has runned up significantly over last 10-15 days, would recommend to accumulate the stock on dip. Most PSU banks have been reporting poor performance on the back of increased provisioning for bad and doubtful debts and restructured accounts. In the short term, the price performance for all the PSUs will be highly correlated to the quarterly asset quality performance. We believe the divergence in operating performance between private & PSU banks to continue for next few quarters. Thus we recommend to avoid PSU bank stocks till further clarity emerges.

youthindia2012: 1000 shares of Hind copper @155, I can hold for about one year and would like to know if I should average or book loss. Thanks

Vivek Mahajan: Stocks like Hind Copper should best be avoided. Metals going through downcycle, it being a PSU decision making is not fast, moreover there is overhang of further dilution. As such avoid averageing and sell the stock in any upturn

nagarajbu: Hi i have M&M Financial 500@rs200. How is the chart looking? and what is your suggestion for me to hold for long term (1-2 yrs)?

Vivek Mahajan: Fundamentally the stock looks good for long term investment. The diversified business model of the company augurs well for its future growth. The company reported strong operating performance for Q4FY13 on the back of strong loan book growth and superior asset quality. Going forward, the management guided for 23-25% growth in its loan book in FY14E which we believe is achievable. Given the niche business model with strong fundamentals, we believe that MMFS would continue to demand premium valuations amongst competitors. HOLD/BUY on declines M&M fin is trading above all crucial averages (21, 55, 200) implying the long term trend is intact.. immediate support lies at 210.. as long as the stock is holding above 210, the stock could witness an up move towards 250 ..

guest: Can I stick to NMDC @ 170/- and IOB @ 85/-

Vivek Mahajan: NMDC has High quality iron ore assets, and low capex and operational costs enables generation of high operating margins (80%), business RoE (142.5%), and cashflows. Cash of Rs225bn in its balance sheet (~44.2% of current marketcap). Increase in free float to enhance institutional interest. Attractive valuations. HOLD/ADD IOB reported poor performance for Q4FY13 on the back of increased provisioning for bad and doubtful debts and restructured accounts. In the short term, the price performance for all the PSUs will be highly correlated to the quarterly asset quality performance. We believe the divergence in operating performance between private & PSU banks to continue for next few quarters. Thus we recommend to avoid PSU bank stocks till further clarity emerges.

guest: Can I enter on Spicejet & Union bank now for 4-5 months.

Vivek Mahajan: Union bank reported better numbers in Q3FY13 after so many quarters of asset quality deterioration. However, we believe the bank痴 asset quality to deteriorate in Q4FY13. The bank痴 restructuring pipeline stood at ~Rs 1700 crore at the end of Q3FY13 (as guided by the management). . In the short term, the price performance for all the PSUs will be highly correlated to the quarterly asset quality performance. We believe the divergence in operating performance between private & PSU banks to continue for next few quarters. Thus we recommend to avoid PSU bank stocks till further clarity emerges.

guest: 1000 SHARES OF SKUMARS NATIONWIDE @9.8 , WOULD LIKE TO KNOW IF I SHOULD AVERAGE OR BOOK LOSS

Vivek Mahajan: Markets r moving on FII flows which is mostly concentrated in large cap frontline stocks. The macro environment has become challenging and protection of capital becomes more important at this juncture. AVOID AVERAGING. Use any upside opportunity to exit even at the cost of booking loss

guest: I have around 2000 PSU Bank stocks like IOB, Allahabad Bank IDBI and Andhra Bank. Many quote below their book value also. Should we accumulate at this time or should we wait.

Vivek Mahajan: IOB reported poor performance for Q4FY13 on the back of increased provisioning for bad and doubtful debts and restructured accounts. In the short term, the price performance for all the PSUs will be highly correlated to the quarterly asset quality performance. We believe the divergence in operating performance between private & PSU banks to continue for next few quarters. Thus we recommend to avoid PSU bank stocks till further clarity emerges.

guest: what should be done in HUL at current levels do u advice to buy more or sell

Vivek Mahajan: Parent is buying 22.5% equity @ Rs. 600 to take it`s holding to 75%(They currently hold 52.5% equity). Techincally the acceptance ratio will be ~ 45%. However we believe the acceptance ration could be as high as 70% +++. Thus it makes more sence to tender the sahres in open offer. Moreover with Unilever increasing the stake you could see more products introduced by the parent in the coming years. Suggest hold and tender in open offer

guest: i have 24000 shares of birla cotyz wat should i do should i wait its been 5 yrs the company shares have not gone up,and i have tatapower wat should i do

Vivek Mahajan: The company is in textile and has seen sharp erosion in topline o ver last couple of months. It has gone into losses in last couple of quarters. Promoter holding is low at 22% and 45% odf their equity is pledged...This doesn`t give confidence. It would be prudent to book loss and exit. There r better plays in the market

guest: hi good mornig sir i have jsw steel of 711 what should i do i want to sell it in two days ....is this share go more down ?

Vivek Mahajan: JSW steel has been under pressure on account of higher RM prices, lack of adequate iron ore availability and high debt on their B/S. Recommend EXIT @ cmp of 690

guest: bought p c jewellers @140 pl. advise

guest: Sir, I have 950 Shipping Corporation of India. I bought right from 165 and averaged it out and it is at present around 90. It is neither giving any dividend. what should I do?

Vivek Mahajan: Dear friend, in case one makes a mistake it is better to accept and not put more money behind(averaging) the stock. We have a negative view on the stock. Global environment is challening which is bound to impact foreign trade. Moreover it being PSU, will countinue to underperform for the want of fast decision making at the centre. Use any market upmove to Exit

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