Bullish on BHEL, RIL; but sell Mastek: Eastern Financiers

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Bullish on BHEL, RIL; but sell Mastek: Eastern Financiers

Rajesh Agarwal, Head of Research at Eastern Financiers, in an interview with CNBC-TV18's Sonia Shenoy and Latha Venkatesh, gave his long-term and short-term analysis on some of the biggie stocks of the market.

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Excerpts from Markets Midday on CNBC-TV18 Watch the full show » ALSO READ See what other experts are saying about markets See what FIIs are saying about the markets See what Udayan Mukherjee is saying about the markets BHEL BSE | NSE 31/05/12 Are Mutual Funds betting on BHEL? Other Stocks in this news Reliance Industries | Mastek |

Rajesh Agarwal, Head of Research at Eastern Financiers, in an interview with CNBC-TV18's Sonia Shenoy and Latha Venkatesh, gave his long-term and short-term analysis on some of the biggie stocks of the market.

While Agarwal suggested a 'buy' for BHEL and Reliance Industries (RIL), he had his doubts on Mastek 's performance and advised an exit for the stock.

Here is the verbatim transcript of Agarwal's analysis. Also watch the accompanying video.

On BHEL

A long term investor should hold on to the stock. There is an overhang in the near future. We have seen the company coming out with an FPO and the overhang continues to be there till the FPO gets over. As there are a lot of concerns on the pricing issue, there is government dilution and they have been coming out with new shares.

Unless it becomes clear, these concerns will always be there. As far as BHEL is concerned, the long term prospects remain quite good. The company's order book is Rs 1, 64,000 crore as on March which is quite impressive. It gives a revenue visibility for at least two-three years down the line. I find the stock to be very attractive.

In the next one year, it is possible for the stock to reach 2,300-2,350 levels. In the short term, the FPO overhang will continue and the stock will languish in this range. One has to wait for at least three-four quarters to get a price target of 2,350.

On RIL

It is a good entry point for RIL. With a long-term view considering the refinery, this company has 66,000 crore cash on its balance sheet. It is a debt free company trading at PE around 10-12 which is really attractive.

There might be concerns in the short term because of D6 gas production being lower or the CAG report. These overhangs will continue for at least next one quarter or so. They have paid Rs 900 crore advance tax which is quite mind boggling.

For longer term, this is quite a good bet. These kind of scenarios give an overhang on a stock, given a right opportunity for a long term investor to invest. Reliance is a stock that one should have in ones portfolio. I would suggest a buy.

On Mastek

I would not advice averaging. Considering the fundamentals, there isn't any point in averaging this stock. The numbers have been quite bad from the last three-four quarters. They lost a big client Capita. As much as 50% of the business comes from UK.

The performance would not improve in the next three-four quarters. It is not point sticking to this stock. It might be languishing at these levels of Rs 10 here and there. One should try to switch from this stock to some other stock. I would suggest a sell.