Stay away from SKS Microfinance: Rajesh Jain

Stay away from SKS Microfinance, says Rajesh Jain, Independent Market Strategist.

Jain told CNBC-TV18, "SKS Microfinance I think is facing a further downside today after the blood-bathed phase last week. It is because of the fact that Andhra state has refused to follow the RBI guidelines and even subscribe to the Malegaon recommendations on the micro finance sector. It continues to follow very tough approach on the process of realizations by SKS Microfinance from the micro borrowers. So, to that extent, the likelihood of the Andhra losses escalating and huge NPA write-offs happening escalates and you might see the stock really suffer because of the impact on the bottomline."
He further added, "However, the broader framework for the micro-finance companies in the country is improving and if Malegaon plus RBI recommendations are implemented, then if the states are also required to tow what the RBI says in this sector then SKS Microfinance should be a tremendous buy once the current downslide in the stock stops. But for the near-term the losses due to Andhra will really keep the picture very bleak on the stock. Institutional investors will want to sell their portfolio holdings and there will be very few buyers at least for the next 6 months to a year. So do not venture in the stock in a hurry."
"In terms of Piramal Healthcare, I think investors will have to take a call whether they want to subscribe to the management track record and potential or whether they believe in shareholder activism, which subscribes to the theory that gains made through sale or businesses to abet should really be shared with the investors. Piramal Health Care I am sure in all their