Zensar, Persistent Can Do Better than Tata Elxsi

Stock Queries

By G.Chokkalingam

Recently I purchased shares of Ashok Leyland for Rs 126. I am also holding Apollo Hospital. What should I doRs —VIJAY SATHYE

Sell Ashok Leyland around Rs 135, which is around 17 times FY19 expected earnings. Sell Apollo Hospital as it lost significant growth momentum and valuation also remains stretched.


I hold 40 shares of BPCL at Rs 478, 35 of Tata Elxsi at Rs 875 and 50 of AB Capital at Rs 199. My horizon is three years.Please advise whether to hold these stocks or exit. — SANJAY MAITRA

You may shift from BPCL to ONGC, which will be a major beneficiary of about 40 per cent bounce in crude oil price from 2017 bottom. I firmly believe that Zensar Technologies or Persistent Systems can do better than Tata Elxsi in the next three years considering their relatively cheaper valuations. Similarly considering cheaper valuation and further consolidation possibilities in the old private sector banking, I firmly believe that Karnataka Bank can create substantially better returns than AB Capital.

Please advise if I should buy Yes bank shares at its current market price or wait for a correctionRs — DEVANSH THAPAR

The quantum of jump in the outstanding net NPA in the September 2017 quarter for Yes Bank has been substantial (around Rs 1,000 crore). To be conservative, please wait for the December quarter results to see whether this spurt in NPA is one-off or just a beginning of rising NPA cycle for this bank.

I am holding 5,000 shares of Andhra Cements purchased at Rs 24. What do you suggest I should doRs — B SANJEEV

Andhra Cements is a play on any possible acquisition, but fundamentally not worth holding as it is making losses over the years and also eroded its net worth. If at all any firm acquires this cement company at a valuation of more than $100 a tonnes, then only you may get any significant return from the stock.

I am holding 400 shares of IDBI Bank and 700 shares of Suzlon Energy. Shall I hold, sell or acquire moreRs — RUCHIN SONI

Sell IDBI Bank — its net NPA is 20 per cent higher than its net worth and moreover, its year-onyear credit growth as of September 30, 2017 was negative at 16 per cent. It is very difficult for banks with such stressful balance sheet to improve the performance when the business is itself degrowing in a big way. Industry prospect of the wind power has turned bleak as the tariffs have crashed to record low levels. Hence, sell Suzlon if there is any tactical upswing to the extent of 10 per cent to 15 per cent in this stock.

I am holding 100 shares of Rain Industries, 200 shares of Polaris Consulting, 170 shares of Lupin, 100 shares of Sun Pharma and 160 shares of GIC Re. Please advise whether to hold or sell. —PRASANNA KUMAR

Sell Rain Industries and Polaris Consulting as valuations are stretched. Hold GIC Re as it is very attractive after significant fall from its IPO price. Both Lupin and Sun Pharma are beaten down stocks, but relatively speaking, Lupin looks more attractive in terms of valuation, hence, you may sell Sun Pharma and add to Lupin.

I am holding 60 shares of Glenmark Pharma at Rs 757.16, 50 shares of Tata Motors DVR at Rs 267.77, 58 shares of IDFC Bank at Rs 68.42 and100 shares of PNB at Rs 176.5. Please let me know whether to sell them or holdRs —NISHANT MEHTA

Hold Glenmark Pharma, Tata Motors DVR and IDFC Bank as they have been beaten down substantially from their peak prices more than what their fundamentals deserve. Successful mobilization of around Rs 5,000 crore through QIP would help PNB to improve its business prospects significantly, hence, hold it.

I hold 100 shares of Sintex Plastics Technologies at Rs 94, 100 shares of Kridhan Infra at Rs 80 and 25 shares of Pfizer at Rs 1,150.Kindly advise whether to continue holding them or sell them. — RK GUPTA

Considering the debt level, near 40 per cent rise in oil price from its 2017-bottom and current valuation multiple, Sintex Plastics is fairly valued. Sell if the stock recovers another 5 per cent to 10 per cent from the current level. Current valuation of Kridhan Infra is also quite fair – sell it if rises further.

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