In an interview to CNBC-TV18’s Latha Venkatesh, and Anuj Singhal, Mayuresh Joshi of Angel Broking shared his readings and outlook on market and specific stocks.
Anuj: How would you approach Hindustan Zinc after the mega dividend yesterday?
A: Positive news for shareholders of Hindustan Zinc. If one really goes by the management speak in terms of the core numbers that they have been reporting, the second half is expected to be better. I think Q3 was a little bit of a blip in terms of expectations purely in terms of the volumes. Going forward as well, as most part of their mining operations, specifically the underground shaft operations, I think they are almost over, so, the mining part in terms of volumes can be substantial.
It is the pricing element that one really needs to take cognizance of and what really happens with zinc, lead, and silver prices. However, largely I think the stock has outperformed; I think the news of the dividend is very positive for shareholders. So, the positive sentiment should see a rub off on the stock in a positive manner.
Latha: Now investor attention will shift to the other PSU stocks from which you can expect a dividend, there are other reasons of course why you would look at for instance the oil PSUs. How are you placed, HPCL, BPCL, and IOC?
A: The kind of moves or the delta that these stocks have given, largely just stated with fall in oil prices of the past four quarters, debt levels going down, working capital constrains going down has largely played in the earnings of all these stocks. The market really is looking out for apart from the dividend payouts that these companies meet out is how the trajectory on the marketing margins will pay out henceforth. The marketing margins also have seen a healthy bump up both on the petrol and the diesel side.
However, there is still scope and the sensitivity to increase marketing margins, increases their earnings in a multifold manner. So, again what really happens in terms of the gross refining margins, a lot of expansion probably happening, the Nelson Complexity is going up with new plants expected to have higher complexities coming through. The refining to marketing ratio also needs to be carefully looked at and resale is one of the best in that. IOC also has a business from their pipeline. So, largely I will still remain constructive on OMC stocks; I think investors holding on should clearly hold on to the OMC pack.
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