Hold on to Infosys, UB Group; Nifty ranged: Experts

Bhavin Shah, CEO, Equirus Securities explains to CNBC-TV18 that the EPS estimate for Infosys for FY13 would have to be adjusted, though just a bit, in view of the IT giant’s announcement of results on Thursday. Bhavin Shah still maintains the 'trade' rating on the stock and does not see any significant upside to buy the stock.  Bhavin Shah advises investors to decide on the company's ability to maintain pricing and margins and address the increased pressure to deliver growth.

Outlook consulting editor Devangshu Datta adds that though the Nifty has bounced between 5625-5650, it at a level of support below current prices. On the upside, he explains, that the Nifty hasn’t really been able to push through the 5725-5750 levels. "Right now I would expect narrow trading in this zone to continue for maybe three-to-four sessions as investors wait for a clear trend to emerge from the Q2 results."
BSE and NSE member Dipan Mehta reveals to CNBC-TV18 that though it would be risky for investors to enter the UB Group stocks, he advises those who own the stock to wait till the Diageo deal and other events pan out. Dipan Mehta is also positive on Infosys as the results have met expectations and on Coal India which is under pressure from the government to sell coal at lower prices. Below is an edited transcript of Dipan Mehta's analysis on CNBC-TV18. Q: With the UB group stocks (UB Holdings, United Breweries and United Spirits) being plagued by problems of every kind, , would you stay away completely from stocks of the UB group?
A: The decision is easier if one has already invested in United Spirits or United Breweries because both stocks have touched all-time highs. So, most investors are sitting on the profit. But investors planning to buy stocks of any of the UB group companies are playing with fire because the companies are entirely event-driven and one doesn't really know how the events will pan out.
So it is an easier decision to hold on to the stocks. And maybe prepare for a bit of underperformance. But at these levels, I think that it is better to completely avoid the stocks from the group.
_PAGEBREAK_ Q: The other stock in focus is obviously Infosys. How exactly have you read Infosys' results as well as the management rejig?
A: Per se, the results are okay. I am surprised the market was expecting Infosys to do even better than this. I think the company has at least delivered as per expectations and at the present levels the valuation, the PEG (price/earnings to growth ratio) is less than 1 which is quite decent. The company has managed to post a bottom-line of 20 percent and the stock is quoting at PE of 15 for the current year. So that makes it attractive compared to other businesses in other industries.
The problem with Infosys, in my personal view, is that the succession plan is designed in such a manner wherein members of the senior management tend to leave before their prime.
Though it may work in the long-term, in the short-to-medium term it does cause a flutter because the senior management changes have impacted the performance, sentiment and the image of the company. Another impacted the communication coming through from the company.
Another trend that reduced the image of the company is continuous lowering of the guidance announced at the start of the fiscal. But considering the results, opportunities from acquisitions, the increase in capacity and capability and attempts to move up the value chain, the company is fairly poised for growth and offer good returns for holders or buyers of the stock. Q: Do you think there is any incremental bad news for Coal India?
A: Coal India, trying to sell coal at lower prices under pressure from the government, is not bad news at all because if it is successful, then that certainly goes a long way towards improving the performance of the company. I do hope that the hedge fund (The Children's Investment Fund Management LLP) is successful because that will pave way for independent directors to be more proactive and more accountable.