KYI: Expert stock tips to make best of market rally

Mohapatra KS: What is the future of Reliance Communications ?

A: No any significant reversal yet. RCom’s modest 5% QoQ revenue growth in Q1FY13 is in line with industry trend of modest single digit revenue. Wireless segment disappointed with marginal 1% increase in subscriber base against expected 2%-3% subscriber growth of peers. Decline in ARPU and ARPM suggests tough competitive environment led by over capacity in voice segment. Increased contribution from MVAS due to pick up in data segment will help against further deterioration of operating metrics.

The company has a highly leveraged balance sheet which dents net profitability. We don’t expect any improvement in debt equity ratio in near term. At current market price, the stock is fairly valued 6.5xEV/EBITDA to its FY 13E earnings (Bharti 6.6x, Idea 6.1x).

Kashish Kumar: I have 100 shares of Steel Authority of India (SAIL) at Rs 97. Can I hold it for one year?

A: Yes. SAIL has witnessed decline in volume growth, mainly due to slowdown in industrial capex cycle and lack of demand of steel as near term visibility is slightly gloomy. However, we are optimistic about ongoing expansion plans and cost-efficiency measure taken by the company, which we believe will start reflecting on financials from FY13 onwards.

At current level, the sharp fall in stock price invites attractive investment opportunity and therefore we advise to buy the stock at current level.

Chandrabose Selvaraj: What is your opinion on Housing Development and Infrastructure (HDIL) and Jain Irrigation ?

A: Jain Irrigation has been undergoing structural changes in business performance by lowering dependence on subsidies and implementing alternatives like NBFC funding, upfront payments from farmers and business correspondent model with few banks. Hence, currently the debt is at peak level and business growth has slowed down in MIS. These issues will gradually resolve through alternative models and restructuring of short term debt with long term at lower tenors. We are positive on the stock and we advise to buy at Rs 70-75 levels.

HDIL has been hit by the recent slowdown in real estate market. However, we are positive on the company as the balance sheet seems to be at a comfortable zone despite the recent turmoil and liquidity issues faced by most of the players. The company has not launched any new projects and progression on few projects is going slowly and steadily with the availability of cash, which is really a positive sign for us.

In addition, it is continuously making an effort to deleverage its balance sheet in this environment. Furthermore, the near term catalyst is its 2 premium projects in Vasai & Virar, which will be key triggers once the interest rates cool down and real estate market revives. Therefore, we believe the stock can be a good bet in real estate market for 6-12 month investment horizon for decent return of 25-30% from said level.

Sathya Narayanan: What are your views on energy companies like Suzlon and Indosolar ?

A: Suzlon is facing challenging times. It has huge debt on its balance sheet, and further we are expecting negative profit in this current financial year. We recommend ‘sell’on Suzlon Energy Ltd.
 
Shibu Kola: What could be the August month expiry price in Adani Enterprises ?

A: Above Rs 190 is possible.

Uday S Tiwari: I have 125 shares of Allahabad Bank at Rs 152. Can I hold it for one year?

A: Yes, Allahabad Bank is a good bank to hold on to.

Anil Pandey: I have 200 shares of Vijaya Bank at Rs 62. What should I do now?

A: Due to current economic scenario, it is best to ‘hold’.

Anurag Srivastava: I have 500 shares of Bank of India . Should I hold it for the long-term?

A: Yes, we recommend holding Bank of India for the long term.

Shreyas Nagaraju: I brought 100 shares of Kwality Dairy (India) at Rs 180. What should I do now?

A: We do not see any significant reversal yet, so look to exit on rallies.

Maria Samin: I have 1,000 shares of 3i Infotech at Rs 10? Can I hold it for three months?

A: No, we recommend to exit on rallies.