Weak corporate earnings pushed stock market into the red for the seventh session in a row. Indices ended at their lowest level so far this year the Nifty slipped 35 points, Sensex dropped 95 points on Friday.
Moneycontrol.com got Rajesh Agarwal, Head-Research, Eastern Financiers to answer the stock queries you sent us on our Facebook page as part of KYI (Know Your Investment).
He suggests buying SBI, Lanco Infratech, Dabur, Exide, Biocon and Havells. Check out his comments.
Kushal Poddar: What is your call on Opto Circuit ?
Agarwal: Debts has been rising with interest costs going up by almost 51% in the first half ended Sep 2012. Its total consolidated debt is around Rs 966 cr. Concerns on the corporate governance front is taking a toll on the market cap of the company. It has low promoter holding of just 28.17%. It would be advisable to stay away from the counter.
Zameer Da: Is it a good time to buy Lanco Infratech ?
Agarwal: Yes - but only if one is ready to hold for a long horizon of 18-24 months. The counter has witnessed huge correction due to high interest cost and the issue related with infrastructure space, but the management is trying to reduce debt by various options like stake sale etc. once that happens bottomline will improve. The company has huge power capacity of 9225 MW out of which 4367MW is operational, the current valuations ignores the huge project pipeline.
Jayesh Gaygol: I have 2,000 of Tinplate at Rs 49. What is its short term target?
Agarwal: Tinplate is India’s largest indigenous producer of tin coated and tin free steel sheets providing packaging solutions to the food processing industry and also caters to other industries like Chemicals, Paints, Electronics and Defense etc. It enjoys around 35% market share in India. The company reported strong performance in Dec quarter with 65% growth in topline & 33% in bottomline. Since you are looking for a short term horizon - I believe that in the short term it might move upto 55 levels but one should keep a stoploss of 46.
Ajit Zolekar: How does the chart of Asian Paint look at current levels?
Agarwal: Charts are looking weak at the moment and the price action witnessed in the last 15-20 days seem to be cooling off. The volumes are also dropping and one should keep a strict stoploss of 4430 breaking which the counter can retest the levels of 4350.
Agarwal: For long term all of the them can give good returns except- Exide where the numbers have been bad and the company is planning to buy out the stake in ING Vysya Life. Although in the short term ITC and Dabur both are trading at very high P/E’s and I won’t be surprised if some amount of correction is witnessed but for longer term one can hold.
Aakif Peerji: Will Tata Motors cross its all time high (i.e. Rs 337) before Q4 result?
Agarwal: Any further softening of rates would be a big boost to rate sensitive sectors such as auto, with even better performance expected from JLR and the fact that Tata Motors valuations are comparably attractive when compared to its peers, one can hold for medium to long term.
Kashish Kumar: I have 100 shares of SAIL Rs 95.Should I hold or sell or average?
Agarwal: Would advice switching to Tata Steel since the positive expectations of lower coking coal price and margin improvement have already been discounted in the price. Moreover with almost no volume growth and limited upside in steel price with huge inventory built up the near term prospects look dim.
Vipin Bhagat: I have BF Utilities at Rs 355. What should I do with it?
Agarwal: It’s a Kalyani group company which is basically into wind power, Value lies in the Nandi Economic Corridor Enterprises Ltd, (NECE), - implementation of Phase I of the Bangalore Mysore Infrastructure Corridor Project which is a indirect subsidiary of the Company. The project would take time due to land problems and the matter being in Supreme court. In the short term though the stock is into complete downtrend and has been hitting new 52 week lows, can go down to 275 levels.
Jai Chandran: What is the view of Sun Pharma in one week span?
Agarwal: The counter is witnessing correction after a sharp run up and for long positions one needs to keep a stoploss of 730.
Nikhil Gupta: Is SBI a buy at current level? Do the asset quality concerns persist?
Agarwal: For both the questions the answer is Yes it’s a good buy and the concerns do persists. Considering the fact that the bank was one of the early starters in cleaning up books any positive surprise on the NPA front would be a trigger, with the size and the kind of growth the bank has maintained in its advances and deposits. One can buy with a time horizon of 9-12 months. No Personal holding in any of the stocks. Company and/or its clients might hold trading / investment positions.
READ MORE ON Opto Circuit, Lanco Infratech, Tinplate, Asian Paint, ITC, Dabur, Exide, Biocon, Havells, TATA Motors, SAIL, BF Utilities, Sun Pharma, SBI
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