Talking stock: Sell IDBI Bank; hold Sun Pharma

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By G Chokkalingam

I have been holding 1,400 shares of IDBI Bank at Rs 112 since 3.5 years. Please advise what to do with them? —ANUP LASKAR

Fundamentally it is a sell as IDBI has created some records which are detrimental to the shareholders. Its net NPA at 16 per cent is the highest in the industry and advances de-grew by 16 per cent year-on-year basis, the worst business performance. Its financial net worth at around Rs 18,000 crore is substantially less than outstanding net NPA of about Rs 29,000 crore as on December 31, 2017.

I am holding 12,000 RCom shares at Rs 36. Should I hold for long term or should I exit? —D JAYDEO

You may hold it till it reaches Rs 30 at least as it has the possibility to improve its stock price on account of further monetisation of its assets.

I bought VIP Clothing at Rs 88 and 20 Microns at Rs 59.50. Shall I hold or sell them? — SH SHAH

Sell VIP Clothing if it rises further near cost price. It is making losses since FY2016 and balance sheet is quite weak — inventories and receivables together, as of September 30, 2017, accounted for about 3/4th of annualised sales and intangible (invisible) assets is close to three times tangible fixed assets. You may hold 20 Microns with a target price of around ?65 considering its valuation and its output, which is used by growing industries.

I am holding few shares of Sun Pharma and Reliance Power. Shall I hold or sell? —MOHANDAS

Hold both Reliance Power and Sun Pharma for the long term. Considering book value and opportunity to reduce debt, Reliance Power could rise to Rs 50 level in the next 1 to 2 years. I believe that large pharma companies including Sun Pharma would come of US FDA issues and get back to growth path from FY2020.

I have 2,000 shares of Unitech at Rs 10.14 and 1,500 shares of JP Power at Rs 8.31. What should be the target? —MOHD ATIR SIDDIQUI

Considering the outstanding debt and losses they are making, it is quite difficult for both of them to come to significant profit growth. You may sell them whenever there is any possible tactical upswings in these penny stocks.

I have 200 shares of Poddar Pigments — 100 at Rs 450 and 100 at Rs 430. Now its trailing at Rs 303. Kindly advise me what to do? —S K MALHOTRA

You may hold Poddar Pigments at current price as it trades at fair valuation now. You may average it only if it falls below Rs 250 level.

I have 350 shares of HEG, 850 of Graphite India and 400 of Phillips Carbon. Should I hold them and for how long? —JIMMY BARIA

You may start booking profits in phases on every possible rise in these stock prices. The chemicals, which these companies produce are extremely cyclical in nature. In my view, smart investors should start booking profits at the peak of business cycles and re-enter at the bottom of the cycles. Trying to find out the optimum prices for cyclical stocks is very tough job even for seasoned investors.

I hold 200 shares of Lupin at an average rate of Rs 1,265. Please suggest a suitable position. —MANASVI MANKAD

I suggest add more Lupin shares to reduce your average cost. I believe that Lupin would come out of all US regulatory issues quite successfully before the end of FY20, and therefore, the stock would recover close to your initial cost price within two years.

(G Chokkalingam is the Founder of Equinomics Research & Advisory)
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Source: Economic Times