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Get all your stock-related queries answered by our technical and fundamental guests with Alex Mathew and Smriti Chaudhary on 'Ask Profit'. #NDTVProfitLive
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00:00 different source of rather than crude and petrol and diesel and gas.
00:08 So if all of that is required, you need investments and allowing these companies to make a profit
00:12 and retaining 15%, I don't think that's a negative thing.
00:15 It's good.
00:16 And I think that's fine.
00:17 I mean, government has continued the policy.
00:20 So that's a good thing.
00:22 Okay, but do you have any recommendations in the power space?
00:25 A lot of these companies, including the power financers, Sameer, have gone up very substantially.
00:32 Does that mean that most of the run-up has already happened?
00:36 So a large part of the run-up for all of these companies, yes, in the near term is already
00:40 through, right?
00:41 So let's talk about the largest player in the power space and especially thermal NTPC.
00:46 So NTPC stock has gone up from about 180 to 300 plus in the last maybe I think six or
00:52 seven years, which means that a lot of the valuation gap catch up that had to happen
00:57 has happened.
00:58 Now NTPC is not only a thermal power generator, but they're also getting into renewable energy.
01:02 They're setting up a lot of solar based plants, right?
01:06 Solar based setup that they're doing.
01:08 Of course, once all of that kicks in, what we will see is some profitability increasing
01:12 and that will take a little bit of time.
01:13 Luckily, solar plants gestation periods are shorter than the four years that thermal goes
01:18 through.
01:19 They're about one, one and a half years.
01:21 So we will see some growth and profitability coming from that angle, which is why the re-rating
01:26 in the stock has happened.
01:27 But I think to a large extent that is done.
01:29 Now, when you come to the power finance companies, which you mentioned, I think a lot of the
01:35 valuation discount that was going on in these power financing companies is well behind.
01:40 In fact, they're trading at probably higher valuation multiples than they have historically
01:45 ever, even when they, you know, when the last power happened in 2006, 2007.
01:51 So a lot of the positivity is captured in.
01:54 Now I don't deny the fact that the growth opportunity for solar is quite large and,
01:58 you know, the risk being a little lower given the fact that these gestation periods, like
02:03 we mentioned, are slightly shorter.
02:04 So, you know, the cash flows for these companies start happening to a time.
02:08 Probability of an NPA goes down.
02:10 Plus the discounts where they were highly leveraged also, you know, they're getting
02:16 better cash flows and which is allowing these power finance companies to ensure that NPAs
02:20 remain low.
02:21 But all of that is in the price what we discussed.
02:24 So I don't think there's too much upside.
02:26 I would be a little skeptical of going out and buying these levels.
02:30 I think we will go through a consolidation.
02:32 I don't expect the stocks to correct major, but we will go through a period of consolidation
02:36 where the stocks will probably not give any return in the near term.
02:39 All right.
02:40 Let's start off with the questions.
02:42 And the first one is coming from Fazalur Rehman and I hope I'm saying that right.
02:48 He's bought 1 lakh units of BCG, that's Brightcom Group at about Rs.20.
02:54 The share is in a little bit of downturn today and is trading around Rs.19.
03:00 Ayush, how does it look on the charts for this?
03:03 Should they continue holding this?
03:04 If you look at the charts of BCG, it is currently consolidating.
03:08 If you look at the weekly charts and in the daily charts, taking the resistance of 200
03:12 day moving average.
03:14 But if we look at it closely, I feel the stock is at the current support level, which is
03:19 at approximately Rs.19.
03:22 So I feel with the trailing stop loss of Rs.19, it can be holded for a long term.
03:27 And once it crosses 20 on the closing basis, we can see up to 23 levels in this.
03:32 Okay.
03:33 All right.
03:34 We've got several other questions as well.
03:36 One on Grasim and by the way, one of the stocks that we were focusing on earlier today.
03:41 This is, I mean, we don't know who this is from.
03:45 I don't see a name.
03:46 So by the way, in case you are messaging us on YouTube or on WhatsApp, do tell us what
03:51 your name is and ideally where you're writing in from as well.
03:55 But I'll come to you Sameer on this one.
03:56 We've got a viewer that's bought at levels of Rs.2117.
04:00 Should the viewer expect that the price will correct with the rights issue coming in and
04:07 priced at what 12.5% discount to yesterday's closing price?
04:12 And interesting conversation this morning, we were wondering whether the paints business
04:18 and the expectation of revenue addition from the paints business is currently in the price.
04:25 So I think revenue addition of the paints business to some extent will be there.
04:28 I think what's more important to see is how much they're able to capture of the market
04:32 share.
04:33 Now, if you ask me, I think, you know, the paints business is a growing industry.
04:39 And as you can see, you know, a lot of these companies, Asian paints, narrow lax, you know,
04:43 all of the others have been doing extremely well, posting very good growth.
04:47 Now with the increased competition, there are two things that's going to happen.
04:50 One, what you're going to see is some amount of margin pressure, because at the end of
04:54 the day, everybody wants to retain their market share.
04:56 And you have two new players, which is DHW and Grasim, which are trying to take into
04:59 the market share.
05:01 So what you're going to see is, you know, margins being a little lower.
05:05 So from that point of view, for Grasim, it's a positive because they're going to be capturing
05:09 new business and getting more profitability and some amount of margin, but for the other
05:12 players it needs to be seen.
05:14 But since your question is specifically on Grasim and whether, you know, the stock price
05:19 could come off given the fact that the QIPs are a lower price.
05:23 So the QIP being at a lower price and the rights issue, not a QIP, a rights issue, it's
05:27 going to the existing shareholders.
05:29 So all the existing shareholders are also getting the benefit of investing in at the
05:33 lower price.
05:34 So it's not necessary that the stock price goes down.
05:38 The company is getting capital at extremely healthy valuations, right?
05:42 If you look at the earnings yield compared to the interest rate, I think there's a massive
05:47 benefit for Grasim, Grasika, even 1870, whatever the price is.
05:53 So I think it's a positive.
05:56 The stock has run up.
05:57 Will it consolidate again?
05:58 Yes, it will.
05:59 But if the investor who's bought Grasim at this price, at the higher price, has the one
06:07 month to two year horizon, I think he will make good returns, invest in the rights when
06:11 you get this right shares and take advantage of that.
06:16 Next one is from Khursheed and he's talking about Alok Industries.
06:20 Now the stock is buzzing today up about 12% right now.
06:26 He's bought the stock at 22 levels.
06:28 The stock is currently close to Rs.30.
06:31 He wants to know the one year target.
06:34 Sameer, do you have a target on Alok Industries?
06:37 So we don't have coverage on Alok, but the reason it's been running up recently is the
06:42 investment, the money put in by the promoter Reliance Industries.
06:48 So the thought process is that if they're putting in this much money, there is upside.
06:53 But I think the stock has probably run up in the near term too quickly.
06:56 And I don't think the operations are going to turn around that quickly for them.
07:00 So I think whenever you get a chance, take some money off the table and probably, but
07:05 I don't have active coverage on the company.
07:06 So I mean, I can't tell you more than the fact that.
07:09 Do you hold the same view as well?
07:12 Should Mr. Khursheed take off some money off the table?
07:16 I don't think so.
07:21 Because of the shoot up in today's session and with the quantity remaining, he can keep
07:26 a stopper of Rs.2650 on this.
07:30 So no target for the next one year from your end also?
07:34 For the next one year, it will be quite difficult from my end, but for the next month, I can
07:38 give it because it's a technical setup, it's a small setup.
07:42 I think it can go up to 36 levels.
07:46 You know, I'm almost certain that you guys are not going to have coverage on this because
07:50 it's a penny stock.
07:51 And I would encourage our viewers to refrain from asking about penny stocks because really
07:57 the coverage is not going to be significant.
08:00 The name of the account, and I must confess that I haven't heard of this one.
08:05 EARUM, do you say that as EARUM Pharma?
08:09 I'm going to check with you Sameer, have you heard of this company?
08:12 And what can you tell us about it?
08:13 Sorry, I haven't heard of it.
08:15 Sorry.
08:16 So, you know, so why don't I ask you this, if you are to look at the pharma space, and
08:20 if you are to contemplate a fresh entry into a company based on the fundamentals, what
08:25 according to you stands out?
08:27 And would you say that now is an opportune time to look at pharma?
08:31 Because valuations, not necessarily as stretched as they have been in the past.
08:36 So pharma is something that will always do well, given the fact that the export market
08:40 is still something that India has a huge opportunity to grow.
08:43 But when the export alone, even the domestic market, you're seeing the consumption of medicines
08:47 increasing not only on the, you know, it's not like it's even things like vitamin D,
08:53 vitamin B, things like that.
08:55 I think there's a huge opportunity for pharma in India as well.
08:59 So companies like Alchem, which cater to this, Alchem actually has a huge, I wouldn't say
09:04 monopoly, but there are three companies that make this vitamin D tablet, Alchem is one
09:07 of them that is seeing huge traction in that.
09:10 But if you were to ask me about the pharma sphere, I still think the large opportunity
09:14 comes from the international markets.
09:16 Now, something like a Lupin, when they get, like, for example, today, they've got approval
09:21 for a ANDA in the US market for a medicine that caters to diabetes.
09:26 You know, these kinds of opportunities throw up huge profitability for companies, because
09:31 these are huge markets that in the US that you're catering to.
09:35 So I will still focus on the larger boys who have a big exposure to the US, Sun Pharma,
09:40 Lupin, Oro.
09:41 These are three companies I would still think have more upside potential.
09:45 But if you were to ask me to pick one of them, I think Sun Pharma, because of the differentiation
09:50 of the product that they're doing, where they're trying to create a brand on some of the generics
09:55 rather than just working purely on the generic side.
09:57 So Sun Pharma in the large cap and in the mid cap, I still think Alchem looks good.
10:02 Torrent is something that's interesting also in the pharma space, but I would stick to
10:05 someone where these companies are larger in known size.
10:09 Otherwise, if you want, you can look at the chemical space where, you know, the APIs are
10:13 there like the Dewey's lab or something, who are not exactly a pure pharma player, but
10:18 making the raw material for the pharma industry.
10:21 So Dewey's is something that's there, there's Supriya Life Sciences.
10:24 Those are companies that are also interesting.
10:25 But again, valuations for most of them are a little bit on the higher side.
10:29 I would say they're expensive, but they're not cheap either.
10:32 Right.
10:33 Sameer, I know you've already spoken about power sector, but we have another question
10:37 from a viewer.
10:38 This one's from Sahil and he's writing in from Surat.
10:41 He's talking about REC.
10:42 Now, he bought the stock at 100 rupees.
10:45 So quite a bit of a profit there.
10:47 And he wants to accumulate.
10:48 Now, we're seeing a little bit of stress in the price today.
10:52 Is it a good time to add more of it in the portfolio?
10:57 So again, it will all be dependent on his time horizon.
10:59 If he's somebody who's looking for maybe the next four or five years, you could accumulate,
11:04 but accumulate at a correction.
11:05 Look, the stock is really not corrected if you're talking of a run up from 100 to 400
11:12 and the stock corrects by 10 bucks or 15 bucks, that's really not a correction.
11:16 Now I'm giving you REC from the pure point of view of fundamentals.
11:20 The stock is trading at about a 1.3, 1.4 times price to book historical, 1.2 times forward.
11:27 You know, a lot of the positivity that everyone's talking about is on the fact that now they're
11:32 going to grow.
11:33 But remember, when you're going to grow as a power lending company, you're going to earn
11:37 spreads, you're going to earn margins.
11:39 So it's not like your profitability is going to grow exponentially or anything like that.
11:42 You're going to grow at about 15, 20%, which is fine.
11:46 Now if I extrapolate that for two years, you're trading at one time price to book on FY25.
11:52 I think most of your PSU banks, which is Canada Bank, Bank of Baroda, Yuko, Central, all of
11:58 these are trading at very similar or in fact lower valuations.
12:02 Now REC, PFC, they borrow from these banks and then they lend to these power companies.
12:08 So I think there's an opportunity for maybe somebody to borrow from the banks directly
12:12 who can give it at a lower cost compared to a REC, PFC.
12:15 REC, PFC's growth is predominantly coming from lending to the discons, which are struggling
12:22 to raise money from other lenders.
12:25 So there's some amount of risk that they're taking into their system.
12:27 Secondly, they're raising money overseas.
12:30 Now they say that they're hedged to a large extent, but there is still some part of it
12:34 unhedged.
12:35 Now if the rupee were to depreciate, that would hurt their profitability.
12:37 So would I be in a rush to buy REC, PFC and average up?
12:40 No.
12:41 In fact, I would advise your advisor, I mean, the person who's invested, if you have this
12:46 thing, sell some of the stock and when it corrects by a good 10, 12%, 15%, maybe add
12:51 there and then add on, not at this point of time.
12:54 Right.
12:55 Very interesting points you made there, Sameer.
12:58 But we'll have to slip into a short break.
13:00 We'll take a lot of more questions after the break.
13:03 Stay tuned.
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15:43 Welcome back.
15:44 You're watching Ask Profit.
15:45 We'll quickly jump into the questions.
15:47 But before that, you can, if you haven't already written to us, you can send in your questions
15:53 on the WhatsApp number that's on your screen or through the YouTube live chat or to any
15:57 of our social media channels.
15:59 Now let's begin with the questions.
16:01 The first one is from Mitesh Bhardwaj and he's talking about EID Parry.
16:07 He's bought the stock at 478 levels.
16:10 Are you sure?
16:11 His question is, should he book profits at this stage or maybe continue holding the stock?
16:16 EID Parry.
16:17 EID Parry's chart patterns are really good.
16:20 We have recommended the stock to our clients as well.
16:22 It is quite positive.
16:24 I feel the investor should hold it with a strict stop-loss of I70 as the markets are
16:29 not doing quite well today.
16:31 So he can hold it with a stop-loss of I70 and on the upside, I feel it can go up to
16:38 620.
16:39 Got it.
16:40 Got it.
16:41 Now we have Ashwini Samy who's asking this question.
16:43 CDSL, which he's bought at levels of 1255.
16:46 Let's pull up the chart and see what it's currently trading.
16:49 And he's also got Hindustan Aeronautics.
16:54 I'm not sure where he's bought this at, but essentially he's asking whether there's
16:58 more steam left and indeed the stock is up as much as 3% today as well.
17:03 I do not know what level he bought at.
17:06 But on the technicals, I shall come to you on these two counters, CDSL as well as Hindustan
17:11 Aeronautics.
17:12 If you're holding, do you take some money off the table now?
17:16 Let's talk about CDSL first.
17:18 If you look at the weekly chart, we have a flat pattern here, but the breakout is still
17:21 awaited.
17:22 So I feel it can be holded, but some partial profit booking can be done at the current
17:27 levels and if we get it again around 1800 levels, then can be bought again.
17:32 Secondly, let's talk about HAL.
17:33 HAL has performed quite well in last three days.
17:36 Again, I feel this stock should be holded by keeping a straight trailing stop-loss of
17:40 2800.
17:41 Once it crosses 3000 levels and it closes above that, we can see a new rally up to 3200
17:47 levels.
17:48 All right.
17:49 Next up, we have a question from Mohit and he's talking about IDFC First Bank.
17:52 Now, the time horizon is two years for this stock.
17:55 He bought at levels of 26.
17:57 Sameer, the stock is around 86.
18:00 What kind of trajectory do you see for two years?
18:03 Should they take some money off the table or continue holding it?
18:09 So actually, banking sector is one of the sectors that I'm actually most positive on
18:13 and IDFC First Bank is one of the counters also where I'm quite positive.
18:17 And let's put it like this.
18:19 It's a small bank growing at a very, very aggressive pace.
18:23 Mr. Vaidyanathan has been growing the bank at about 30%.
18:26 If you look at the deposit franchise of the bank, right?
18:29 So it has been it has one of the fastest growth rates when we talk about deposits.
18:33 They're not they're not high, you know, giving you some super exceptional rates on the FDs
18:40 or anything, but just the fact that they've been able to grow for some reason at this
18:44 pace without giving higher rates is something commendable.
18:48 Now they have a lending business, which is catering to a lot of the how do I put it?
18:56 Consumer focusing kind of businesses, not businesses, but consumer focusing, consumer
19:01 lending, and that has huge spreads.
19:03 So in the recent, of course, RBI circular, what it did is it increased the risk weightages.
19:08 So of course, for the near term, what you'll see is maybe some capital reduction that they
19:13 will have capital adequacy.
19:14 So maybe they may have to slow down a little bit in the growth rate or raise some fresh
19:17 amount of capital.
19:19 But barring everything, I think IDFC is doing really well.
19:22 Since it's only a two year horizon, I think I would give it a target of 120 and not more
19:26 than that in two years.
19:27 But if somebody has a slightly longer term horizon, maybe like three to five years, I
19:31 think this this stock could be one of the stocks that actually multiplies, multi fold.
19:36 So I will be buying but at corrections for this person, I would say don't sell because
19:40 you have a two year view, you'll probably get 120, 130 levels.
19:44 Okay, we've got a question, I believe from Prasad on YouTube asking for the six month
19:50 view on Nuvoco Vistas.
19:54 What is the buy sell hold recommendation essentially is what he's asking.
19:57 I don't think that he has taken a position yet.
20:00 Ayush, it's not done too much in any of the timeframes if I look at over the last one
20:06 year.
20:07 What is the recommendation over the next six months though?
20:11 As you said rightly, the stock is consolidating from approximately last one year October 2022
20:16 and it hasn't crossed 400 levels on the closing basis.
20:19 I feel if he wants to buy, he can look for a level of between 330 to 340 that will be
20:25 an ideal buying position in the stock.
20:27 And once it crosses 400, then we can see a value up to 475 to 480.
20:33 Next up, we have another question on in the banking space and Sameer, I'm going to take
20:38 this up with you.
20:39 This one's from Ankush.
20:40 He's talking about PNB.
20:42 He bought the stock, he bought 4000 shares at 54 levels.
20:46 Now, the stock is around 96, has given returns of about 70% in the last one year.
20:52 What kind of view do you hold for the longer term for PNB?
20:56 So I think the big rally that had to happen in PNB is done with, which was the valuation
21:01 gap catch up.
21:03 So PNB was trading at about 0.5 times book value.
21:06 Now it's up to about 1.
21:07 Now you have to factor in what is going to be the growth for these banks.
21:11 It's not about valuation re-rating anymore.
21:15 So the way I look at it is if the bank is able to go at about 15 to 18% and you see
21:22 some amount of recovery is coming.
21:23 So you've got to remember that some of the PSU still have a lot of recovery capability
21:29 that is left.
21:30 So they've done a lot of the provisioning, but recoveries are still to happen.
21:33 So that could lead to some profitable growth.
21:35 Like I said, it's probably again, go through a bit of consolidation.
21:39 Don't expect more than 15% return in the stock going forward, if you ask me.
21:44 But I would still hold on to all of these PSU banks because the momentum is still along
21:47 there.
21:48 I mean, still there, I think in the PSU banking space.
21:51 So hold on to it.
21:53 Corrections maybe closer to 80 will be a buying opportunity, but probably in one year, one
21:58 and a half year target could be about 100, 110.
22:01 Speaking of holding on, we got a viewer, Michael, who's bought BSE at levels of 896.
22:08 The stock is currently trading at 2,281.
22:11 Sameer, so therefore, the question to you is, would you take some money off the table?
22:16 Do you think that there is at all any froth and any exaggeration in the valuation of this
22:23 counter?
22:24 Should you at least, at the very least attempt to recover your cost price?
22:29 I would say yes, it's worth taking out your cost price and worth taking some profit, right?
22:35 So everyone is very positive on BSE because the F&O segment is something where they were
22:40 massively lacking in.
22:42 All that business used to go to NSE, but ever since they've done this weekly contract of
22:46 options expiring on Friday for the BSE and Monday for the bank BSE, they're able to get
22:56 some amount of traction and get some amount of market share of that.
23:00 Now the question remains is how long is that going to sustain for?
23:03 If they're able to sustain and capture some amount of the market share of the F&O segment,
23:08 then I think BSE is a great opportunity because look, the bulk of the business now is happening
23:12 in the F&O space.
23:13 But why I'm not as positive is if you're just getting it in one index option and really
23:19 not translating into other stocks or any of the other things, need not be something that
23:23 can be a long term revenue driver.
23:27 So whatever revenue had to come from that, profitability to come from that is done with.
23:31 Now the question is what next?
23:32 Now again, valuations like you rightfully said are a bit frothy.
23:36 So across the board, be it MCX, which is an exchange that listed, be it BSE, which is
23:42 an exchange that listed, the valuations have all doubled and tripled.
23:45 So I get a feeling whenever we get a, I'm not saying we're going to have a bear market
23:49 anytime soon, but say in the next year, year and a half, you have a bear market or two
23:53 years down.
23:54 What happens is the volumes drop significantly.
23:58 And as that happens, the operating leverage works in the negative way because all your
24:01 cost is a fixed cost and if volumes are dropping, then your profitability gets hammered.
24:06 So I would think this is a good time to take some money off the table.
24:09 This is not like a long term growth story, one directional.
24:13 This is going to have its up and down.
24:14 So wait for the correction and you can get a chance to maybe buy it back later.
24:17 Fantastic.
24:18 All right.
24:19 On that note, Sameer, as well as Ayush, thank you so much for joining us on this show.
24:22 And viewers, thank you so much as well.
24:23 I hope that this show answered some of your questions.
24:26 Of course, we'll be back on Monday to take a lot more.
24:29 That brings us to the end of the show from Shruti and myself and the team that put this
24:33 show together.
24:34 Thank you so much for watching.
24:35 Do stay tuned.
24:36 Lots more coming up on NDTV Profit.
24:37 Take care.
24:52 Bye.
24:57 (bubble pops)