Symphony stock lost 40 percent this year due to silly summer wherein there were intermittent rains in their core markets which impacted their earnings performance, Dipen Sheth of HDFC Securities said.
Benchmark indices continued to consolidate for the second consecutive session on Thursday after hitting a life high of 11,760 on the Nifty.
When the Nifty was at 11,000, many experts were cautious on the market and did not think the market would reach at such level.
One of them was Dipen Sheth, Head- Institutional Research, HDFC Securities who said, "We were cautious on the market at 11,000 and we had said there would not be much headroom for further upside, but the frontline indices rallied 9-10 percent from that levels, led by few major largecaps."
He feels it is a narrow move with steady inflow from domestic institutional investors, financial savings have been driving this rally. In last 12 months, about $19 billion DII inflows have been seen by the market.
He believes DII inflows are not going to stop. "In fact, financialisation of savings in India is finding their way into equity markets. We will see broadbased rally going ahead, though there are valid macro concerns."
According to him, clean up of NPA is expected to happen in an acceptable time period and in fact banks are trying very hard to do that. "But as the elections are around the corner, interest rate rising, crude oil prices going up etc, what kind of haircuts will be taken by these banks will be closely watched."
One thing is sure that it is not happening immediately, he believes.
HDFC Securities is more constructive on IT stocks which rallied 30-40-60 percent in last one year due to fundamentals and now the rupee weakness.
These companies made remarkable response in face with challenges. So the networth is not going to wipe out immediately, he feels.
On KNR Construction, HDFC Securities made good money. Sheth feels it will be a great company for most time to come.
On the construction space, companies which manage their working capital and execution cycles can do well, he said.
He believes PNC Infratech has good working capital cycle, but it is not superior as KNR Construction. "PNC has better net-to-debt equity ratio around 0.15-0.2. In fact they are set to monetise some BOT assets, which is free up cash for investment into other projects. The company is sitting on Rs 1,800 crore revenue last year and Rs 14,000 crore orderbook."
Symphony stock lost 40 percent this year due to silly summer wherein there were intermittent rains in their core markets which impacted their earnings performance.
But the company has excellent business, nothing has been changed about their franchise mode, nothing has been changed about taking away their 50 percent market share in the organised aircooler markets and future of aircoolers in this country, Sheth said.
Remember air coolers are impulse purchase when temperature shoots through 40 degree celsius.
So 40 percent fall is good way to acculmulate this stock with same management and structure, he feels.
In case of Tata Motors, he said there is interesting revival on the domestic business but JLR which moves the needle, 80-85 percent value can be derived or destroyed from JLR where there is a problem for growth and profitabliity. "There is volume challenge, capex and cash consumption challenge."He said, "I would value time for Bajaj Auto and Hero MotoCorp."
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