March mayhem on Dalal Street may have made a deep cut in your portfolio, but if you have cash in hand, then you can use it not just to make up for the loss, but also pocket some superlative returns.
While the bluest of the blue chips have been battered to unthinkable prices in this bear hammering, it also presents you with an opportunity to pick up some of the newly-listed stocks, whose share allocation you sorely missed during the IPO process.
Better still, you can now pick them at prices below their issue prices.
As many as 270 of the newly-listed stocks of recent years now trade below their issue prices, including 25 stocks which had debuted at more than 50 per cent premium on the bourses. The list excludes penny stocks, i.e., those with share prices below Rs 10.
Stocks, whose IPOs had created a lot of buzz in recent years but are now down in the dumps, include Ujjivan Small Finance, CSB Bank, Rail Vikas Nigam, Chalet Hotels, Lemon Tree Hotels, Bandhan Bank, Astron Paper, Apollo Microsystems, Nippon AMC, Capacite, SBI Life, Salasar Techno, Shankara Building Products, SBI Card, RBL Bank, Quess Corps and Ujjivan Financial Services.
Analysts on Dalal Street say it is only a matter of time that the market sees a rebound and, thus, the opportunity to buy these businesses may be shortlived.
“We are somewhere close to the bottom, if not at the bottom itself. The situation is still evolving on a daily basis. I think the situation will reverse when you have a lesser number of cases coming out of the European countries,” said Manish Sonthalia, Head of PMS at Motilal Oswal.
Shares of the above mentioned companies have fallen up to 85 per cent in the ongoing market crash and now available at mouth-watering prices. Most of them belong to EPC, logistics, banking and financial sectors – parts of the market that have taken the biggest hit in the ongoing selloff.
Several top names such as ICICI Bank, Just Dial, Galaxy Surfactants, HCL Tech, HAL, BEML, Godrej Agrovet, ICICI Pru Life, Tata Steel, Cochin Shipyards and Mahindra Logistics, among others, have also taken a huge battering.
Nitin Agarwal of IDFC Securities is bullish on Galaxy Surfactants. He said continued growth momentum in performance surfactants across markets combined with growing premiumisation trends in emerging markets would enable Galaxy to generate 15.1 per cent Ebitda and 18.1 per cent CAGR PAT over FY20-22.
He projects the stock to reach Rs 1,998, a potential upside of 59 per cent from last close.
Among banking names, Motilal Oswal has a ‘buy’ a rating on ICICI Bank with target of Rs 650, a potential upside of 82 per cent. The brokerage has also ‘buy’ ratings on RBL Bank and Bandhan Bank with price targets at Rs 415 and Rs 500, respectively.
At the same time, six stocks from the list have jumped in double digits year-to-date showing resilience in the difficult environment. Yet, these stocks are still trading below their issue prices.
They include Niraj Cement (up 62 per cent), Indostar Capital (49 per cent), Lotus Eye Hospital (26 per cent), Thinkink Picturez (14 per cent) and R Systems (11 per cent).
HDFC Securities has a price target of Rs 305 on Indostar Capital, a potential upside of 14 per cent from current price.
Market veteran Raamdeo Agrawal said the time was ripe to deploy funds in quality names in a ‘short-blast SIP’ mode. “Go and find two-three brilliant managers and start rolling out your 10-20 per cent cash now and do not buy everything in one day; spread it over two-three months. You will get an average of the worst of the selloff and after one year-one and a half years you will have a fabulous return out of your courage,” he said.
