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Founder, Equinomics Research & Advisory
I have KRBL and Nucleus Software at price of Rs 520 and Rs 505, respectively. I have been holding these for 1.5 years. The stocks are trading nearly at 50 per cent of purchase price. Does it make sense to hold them for long term? -NITIN
You may hold KRBL with a target price of around Rs 345, which is a fair valuation of 15x FY2020 estimated earnings of Rs 23. However, if the pending income tax case turns in favour of KRBL, then you may revise target price upward to over Rs 400. Considering significant business drawn from Far East and South East Asia (which is negative in the short-term due to spread of Covid-19) and also comparative valuation and business size, you may sell Nucleus Software and buy Cyient with a target price of around Rs 576, which is 12x FY2021E EPS of Rs 48.
My age is 37. I have 58 shares of L&T for my retirement, which is 18 years away. Can I add moreRs Average cost is Rs 600. -ASHISH CHOWDHRI
You may continue to hold present holding and also add now as L&T stock, after recent fall, trades attractively around 16 PE on one-year forward earnings. However, if you are considering continuously adding for the next 18 years, you may prefer stocks like HDFC Bank and Nestle, which offer better sustained growth visibility with lower long-term cyclical risks relatively due to their business nature and leadership positions.
I have around 2,600 shares of DHFL at an average price of Rs 100. Is there any likelihood that the stock price might rise and I can reduce my loss or should I sell it off immediately? -ANAND S
It is highly doubtful whether you can recover your cost of investment as this NBFC is sitting on over Rs 90,000 crore of liability and it is not certain whether it can generate any significant surplus for the shareholders after selling the loan assets and settling its own liabilities. However, having lost 90 per cent of your capital, you may hold the stock if you can take further risk as its current market cap is just around Rs 315 crore, and even if the company generates over a thousand crore rupees worth surplus value after hiving off loan assets and settling the liabilities, your loss in the stock could be minimised significantly.
I have100 shares of Welcast Steels, bought at Rs 550. Can I hold the same for long term? -H N JAJU
Though it made net loss in the latest quarter, you may still hold the stock till you recover the cost considering its past performance and the strong business performance of its parent company (AIA Engineering).
I have 880 shares of Karur Vysya Bank at Rs 112 and 440 of Karnataka Bank at Rs 149. Should I hold till I recover my loss or exit? -PRAKASH
A vast majority of old private sector banking stocks have fallen by more than 50 per cent in the last two years due to rising provisions for the bad loans. However, both these banks have a successful track record for about a century and hold business size of more than Rs 1 lakh crore, but trade at just Rs 2,000 crore to Rs 3,000 crore market caps. While you may hold Karur Vysya Bank, you may add significant quantity of Karnataka Bank to reduce your average costs. While Karur Vysya Bank trades around 1x its adjusted book value, Karnataka Bank, at current price, has about 50 per cent discount to adjusted book value. Moreover, Karnataka Bank doesn’t have any significant exposure to the telecom sector, offers a dividend yield of about 4.5 per cent, still maintains over 7 per cent year-on-year business growth and most importantly, it has proposed issue of bonus shares, which reflects management’s confidence on its ability to service its existing equity base.
I hold 1,000 shares of Sequent Scientific at an average cost of Rs 70. There is talk of promoters selling a controlling stake in the company. What should I do? -RAJENDRAN
Sequent Scientific trades at a fair valuation of around 21 PE on one-year forward earnings. Hence, you may book profits in two or three phases if it rises 5-10 per cent from the current level.
Is it the right time to invest in National Peroxide againRs I have 50 shares at Rs 3,200 each. -PIYUSH SONI
I do not advise investing in National Peroxide at current price as there is no significant recovery in hydrogen peroxide prices after massive fall from 2018 peak prices. Actually, you may consider exiting the stock now as it has posted a net loss in the latest quarter and the stock is unlikely to recover unless the hydrogen peroxide prices recover substantially.
I have 100 shares of Suven Life purchased at Rs 26 long time back. Please advise whether to add or reduce. -P R SHENAI
Post de-merger, valuation of Suven Life Sciences doesn’t look attractive and hence, book profits in two or three phases as the stock moves up further.
I have bought shares of Neuland Laboratories at Rs 454 per piece. Is it a good bet given pharma sector has a bright future ahead as said by some experts? -UTSAV CHAUDHARY
You may hold Neuland Laboratories considering the recent improvements in the operating parameters with a target price of around Rs 550.
Please send your queries on Stocks to et.stocks@timesgroup.com; Mutual Funds to et.mfs@timesgroup.com; Tax to et.tax@timesgroup.com; Insurance to et.insurance@timesgroup.com; Realty to et.realty@timesgroup.com.
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