Talking stock: DHFL trading at a discount

G Chokkalingam
Founder, Equinomics Research & Advisory

I am holding shares of Bharat Dynamics, purchased at Rs 415-420 per share. Currently it is trading at around Rs 280-285. Please guide whether to retain or sell off?—PAWAN SHARMA

Fundamentally, Cochin Shipyard has better chances of recovery in stock price as compared to Bharat Dynamics in terms of free cash, PE multiple, order on hand and potential business growth. Hence, you may consider shifting to Cochin Shipyard.

I have 185 shares of Action Construction Equipment at Rs 105. Should I hold it or sell it in near future? —SANJAY GIROTREE


You may hold Action Construction Equipment with a target price of around Rs 120, which is a fair valuation (PE of 20 for FY19) for this company, which has quite strong balance sheet in terms of least leverage and manageable inventories and receivables.

I have JP Infra at Rs 9 and Videocon at Rs 13. What is your view? —TUSHAR GAYKAR

Considering huge debt and other liabilities and also substantial losses by both companies, I doubt whether ultimate resolution through NCLT would leave any significant value for the shareholders. However, having lost 55 per cent to 75 per cent of your investments in these two penny stocks, you wait for any tactical rise of 10 per cent or more to exit from them.

I am holding stocks of Sintex Plastics (Rs 46), Deepak Nitrite (Rs 229) and ICICI Lombard (Rs 622). What is the way forward? How long we can hold? —GAJENDRA KUMAR

Over 36 per cent fall in crude oil price is positive for the plastic products producers like Sintex Plastics and hence, hold the stock with a target price of around Rs 35. Along with oil price crash, many chemical prices, including phenol, have fallen quite badly in the last two months. Hence, Deepak Nitrate may have some pressure in the short term. Therefore, please hold it only if you are a long-term investor, otherwise, sell Deepak Nitrate now and then buy back if stock price possibly corrects another 10 per cent to 15 per cent. ICICI Lombard is fairly priced around 35 PE on current year’s expected earnings. However, if you are a longterm investor, then you may hold it for another 2-3 years to reap the benefits of this long-term growth stock.

I am holding 300 DHFL shares at Rs 200 per share. Should I buy more or sell? —LAKSHMANAN M

Considering the facts that its asset quality remains intact and stock trades at discount to its adjusted book value, you may add DHFL on any possible declines.

I am holding Avanti Feeds at Rs 440. As the share is way down from where I bought, please advise on what should I do. Should I buy YES Bank at current price point. —ARNAB SARKAR

Hold Avanti Feeds with a target price of around Rs 450, which is a fair price in my view. Yes, you may consider buying YES Bank with medium- to long-term target price of around Rs 300 as at around 1.6 times current year’s adjusted book value and over 50 per cent year-on-year credit growth, the stock looks very attractive.

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