Only existing shareholders can hold onto education stocks: G Chokkalingam

In a chat with ET Now, G Chokkalingam, Executive Director & Chief Investment Officer, Centrum Wealth Management, shares his views on Education stocks.

ET Now: What to your mind is leading to the uptick when one sees the education stocks? Of course there is news on Educomp but what about the rest of the pack?

G Chokkalingam: Most of the stocks have balance sheet concern. We do not know the reason whether genuine or there is any issue on governance but many of these names if you look at the balance sheet of 2013 financial year, there is tremendous stress in terms of inventories and also the stocks have been beaten down by 80-90% in the last two years.

So therefore there would be a technical rebound and people who have lost lot of money, they can continue to hold on. I would not advise buying these kind of stocks unless they restructure the balance sheet and improve the quality of the balance sheet. Otherwise only existing shareholders can hold onto the stocks.