Talking stocks: Hold Hudco, sell Birla Cable

By G Chokkalingam

I have purchased 53 shares of Vedanta at Rs 312. For how long should I hold these shares? — N Panwar

You may hold Vedanta with a target price of around Rs 360 (which is around 10x FY2019 estimated earnings) in the short term considering robust performance of oil and zinc businesses.


I hold 500 shares of Birla Cable at Rs 64. Should I keep it for two years? — R K Ajmani

Since FY14, its revenue base consistently shrinking. The valuation of stock looks stretched even after taking into consideration the market value of investments in Universal Cables. Hence, you may exit it if the market price nears your cost price.

I hold 500 shares of Powergrid bought at Rs 203, 1,000 of Hudco at Rs 81.8, and 500 shares of Karur Vysya at Rs 117.15. Should I sell them?— Chankarpani

PowerGrid Corp trades at single-digit PE on consensus estimate of FY2019 EPS – hold the stock with a short-term target price of at least around Rs 220. Hold HUDCO with a target price of around Rs 90, which is around 2x current year’s adjusted book value. After over 20 per cent fall from the recent peak price, Karur Vysya Bank looks quite attractive. It also trades at a significant discount to a couple of peers in the old private sector banks. Therefore, hold it with a target price of Rs 135.

I have 2,000 shares of Sunil Hitech at Rs 13.18 and 100 shares of Cochin Shipyard at Rs 532. Should I hold or sell them? — Sugam Choudhary

Hold Sunil Hitech with a target price of around Rs 15, which is a fair price considering its both expected EPS of around Rs 1.30 for FY2018 and its balance sheet status. Hold Cochin Shipyard for long term as it is, in my view, an emerging wealth creator. Its expansion plans, strong growth in highly profitable repair segment, free cash held and most importantly, the aggressive monitoring of oceans by all major nations in Asia would help in making this stock as a solid growth stock in the long term.

I have 1,029 shares of Gammon Infra at Rs 26. Please advise what to do with them. — Shri Narain

Even at such a low price, the valuation of the stock looks stretched. Although the stock trades at less than half of its book value, it has invested about 80 per cent of its total assets in subsidiaries, SPVs, joint ventures, etc and a majority of these investee companies are facing major business constraints. However, having lost 85 per cent of your capital, it is better to hold this penny stock for any possible tactical upside.

(The author is Founder & Managing Director, Equinomics Research & Advisory)

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