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Stock Analysis, IPO, Mutual Funds, Bonds & More

Talking stock: Sell Zenith Birla, hold RIL

Hold RIL with a target price of around Rs 960 and also Siemens if you can hold beyond one year.

ET CONTRIBUTORS|
Updated: Oct 23, 2017, 08.25 AM IST
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Sell Berger Paints as its PE multiple of over 45 for the current fiscal is too high to justify the current price.
Sell Berger Paints as its PE multiple of over 45 for the current fiscal is too high to justify the current price.
By G Chokkalingam, Founder, Equinomics Research and Advisory

I have 20,000 shares of Zenith Birla and 7,000 of 3i Infotech. Please advise what to do? —HN JAJU
Balance sheet of Zenith Birla doesn’t give any confidence about its revival at all – on a revenue base of about Rs 150 crore, it holds a debt of Rs 235 crore and receivables and inventories together account for 93 per cent of sales as of March 31, 2017. Hence, you may exit from this stock. You may hold 3i Infotec as its fair value could be around Rs 4.40 based on valuation of 1.5 times enterprise value to annual revenues – most consolidation in the mid-sized IT space happened around this ratio.

I have bought 500 shares of Rana Sugar at Rs 9. Please suggest what should be done? —VINAYAK K JOSHI
Hold it till it reaches around Rs 10. Though overall debt is very high, its short-term debt is close to its inventories and long-term debt and market cap together are quite low compared to its revenues. Hence, its intrinsic value of asset could be worth at least Rs 10 per share.

I have Shipli Cable bought at Rs 18 and Urja Global at Rs 1.20. Should I hold or sell? —SONU YADAV
In my view, Shilpi Cable is a speculative stock considering the corporate developments and also the fact that it hasn’t published results after December 2016. If you like risky trading bet, then you may hold it, otherwise, it is better to exit. You may sell if Urja Global spurts beyond your cost price as the company has been reporting just 2 to 4 paise as EPS and has almost stagnating revenues in the last three years.

I have Sujana Universal at Rs 3.2 and Tulip Telecom at Rs 4.2. Please suggest. —RAHUL JAIN
You are unlikely to get any return from Tulip Telecom, considering the status of its balance sheet before it got suspended from the stock exchanges. Sell Sujana Universal as it is making losses for the last 4 years and also its balance sheet is a major cause of concern – its receivables as of March 31, 2017, at around Rs 2,400 crore were marginally more than annual revenues at consolidated level.

I hold 30 shares of Tech Mahindra at Rs 374, 15 of Cyient at Rs 538, 20 of Inox Wind at Rs 538, and 30 of Tata Motors DVR. Kindly advise whether to hold or sell. —RK GUPTA
Hold all except Inox Wind. While other stocks have the potential to appreciate at least 10 to 15 per cent from the current levels based on valuations, Inox Wind is facing tremendous stress on the balance sheet and now its sales also shrunk very badly.

I am holding 1,400 shares of RIL at Rs 900, 800 of Siemens at Rs 950 and 600 of Berger Paints at Rs 220. Please advise shall I hold or sell these stocks. —BR KOHLI
Hold RIL with a target price of around Rs 960 and also Siemens if you can hold beyond one year as in the short-term its valuation is stretched. However, sell Berger Paints as its PE multiple of over 45 for the current fiscal is too high to justify the current price. Moreover, steep recovery in oil prices would impact the margins of paint companies.
(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.)
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