Talking stock: Lupin a better bet than Sun Pharma

G. Chokkalingam
Founder, Equinomics Research & Advisory

I am holding 1500 shares of Suzlon Energy at Rs 13.50 , 300 shares of Reliance Naval at Rs 61.40 and 500 shares of Zee Learn at Rs 47.50. What should be my strategy for these? —DEVRAJ CHAKRAVORTY

Sell Suzlon if there is any tactical upswing as sinking revenues (as per the latest quarterly results) and high interest costs would make the turnaround very difficult in the short to medium terms. Zee Learn is fairly valued at present – sell it if it moves above Rs 40. Reliance Naval is making losses for several quarters in a row, sitting on huge debt and interest cost is 8 times sales in the latest quarter. Sell the stock if there is any tactical upswing in the stock price.

What is the future prospect of Bliss GVS Pharma, Triveni Engineering and Trident? Do I hold for five years or sell it and invest elsewhere? — JISHNUDEB MUKHERJEE

Considering its steady growth in its business over the last five years and current earnings, hold Bliss GVS Pharma with a target price of around Rs 210. Hold Trident with a target price of around Rs 70, which is a fair valuation of 9 times FY2020 expected earnings. Hold Triveni Engineering for more than a year or till sugar cycle turns around — its longterm debt is very small and its short-term debt is less than the inventories (mainly sugar) as on March 31, 2018. Such sugar companies would recover soon along with recovery in the sugar industry.

I am holding Avanti Feeds at Rs 2,580 and Tirumalai Chemicals at Rs 2,267. Can you please advise on the same. Are they good for long term? — SURABHI JAIN

Hold Avanti with a short term target price of around Rs 510, which is a fair valuation for the stock. You seem to have bought Thirumalai Chemicals before recent split (1 to 10 shares) buy after the stock jumped 19 folds in the short span of times — never buy cyclical stocks after such mega jump in short span of time. Sell the stock if there if it moves up 5% to 10% from the current level.

I have 200 shares of Sun Pharma, purchased in 2016 at Rs 746.Please advise me whether to hold it or I should book the loss and shift to some other script. — MADHAV LB

You may shift to Lupin, which can move up faster than Sun Pharma from the current levels as the latter has become little stretched in terms of valuation, after recent run up in stock rice, as compared to the former.

I am holding 100 shares of PNB at Rs 91.20. What is the expected target priceRs —VEDANANDA SHIVANANDAPPA

If you get your cost price, sell PNB and buy Indian Bank, which is, in my view, the best public sector bank in terms of asset quality, credit growth and price to adjusted book value.

I am holding 1,000 shares of Zee Learn at Rs 47, 500 of JK Tyre at Rs 180, 100 of IG Petro at Rs 730 and 300 of GSPL at Rs 208.Please advise. — PRASANTA SEN

Zee Learn is fairly valued at present — sell it if it moves above Rs 40. Hold JK Tyre for the long term to recover your cost – in the short term elevated oil price and rising natural rubber price are negative developments for this company. Hold IG Petro now but sell if it crosses Rs 550 as phthahalic anhydride business is highly cyclical. One should always buy cyclical chemical stocks at the bottom of the cycle, not at the peaks. Sell GSPL around Rs 220, which is a fair value on the basis of around 17 PE on FY2020 expected earnings.

I am holding 600 shares of Tata Motors at an average price of Rs425. Please suggest. — MEET A SHAH

In the short- to medium term, Tata Motors is unlikely to rise significantly due to huge investment needed for and also uncertainty arising from the success of shifting of diesel variations to petrol cars in the UK market. Hold it for very long term to minimise your loss.

I have purchased 500 Sintex Industries at Rs 38.30 and1000 Suzlon Energy at Rs 19.80. Kindly advise. —GREEM D’MELLO

Hold Sintex Industries as it is already down enormously and trades at reasonable valuation and sell it if it improves close to Rs 18, which is fair valuation for this stock. Even less leveraged good textile companies are trading at only 9 to 10 PE on trailing basis. Sell Suzlon as sinking revenues (as per the latest quarterly results) and high interest costs would make the turnaround very difficult in the short- to medium term.

I would like to invest in Shiva cement.I heard that JSW Cement take over 53% share of Shiva Cement and JSW is the promoter of Shiva Cement. Please advise me on this stock. —SAJITH KG

If you are a long term investor then yes you may buy this stock as JSW Cement holds about 53% equity stake in it and JSW group has the credible track record of turning around the growth path of steel business. However, JSW Cement’s present valuation is stretched.

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