Since last Diwali, the markets have not given any returns. In fact, several stocks have eroded investor wealth and unlike 2014, the year has not been particularly good.
Syndicate Bank is attractively valued for a number of reasons. One is that at the current dividend of 47%, the dividend yield itself works out to 5.15 per cent. There are several other reasons to be buying the Syndicate Bank stock and they are as follows:
1) Restructuring of Discoms
The government's recent decision to restructure the Discoms is likely to benefit the government owed banks like Syndicate Bank, that have a significant exposure to state power utilities.
2) Capital infusion from the government
The capital infusion from the government is also likely to benefit a bank like Syndicate Bank.
3) Dividend yield of almost 5 per cent at the current market price of Rs 90.
4) Non performing assets for the banking sector may have peaked. With economic revival on the cards, the bank could see a gradual reduction in non performing assets going forward.
5) Fundamentally the stock seems undervalued at the current levels. The EPS of the Bank is likely to be close to Rs 27 for 2015-16. Thus, at the current market price the stock trades at a p/e of just 4 times. The price to book/value is also under 0.5 times. The share is a good pick at the current levels.
Tata Motors has rallied from levels of Rs 270 to the current levels of Rs 405. The stock us undervalued even at the current levels.
Now, let is see why Tata Motors is a good pick.
1) With problems at Volkswagen, there could be a shift in sentiments to other auto players like Tata Motors, which makes the prestigious Jaguar Land Rover (JLR) range.
2) Share price of Tata Motors has fallen from levels of Rs 606 to the current levels. The one reason for the dip was worries that slowing economic growth in China could affect sales of JLR in the country. However, interestingly, over the last few months, the company has done well in other markets like the US. So, actually speaking sales in the US has got a big boost.
3) Leading brokerages in the country have placed the EPS of Tata Motors at around the 52-Rs 54 for FY 2016-17. This is just about 8 times p/e for a world-class automobile manufacturer. If Maruti can trade over 30 times, p/e, one cannot understand why Tata Motors' shares remain so highly undervalued.
4) Jaguar Land Rover unveiled several new exciting models at the Frankfurt International Automobil-Ausstellung. On display were 19 vehicles from its portfolio, including the all-new Jaguar F-PACE and the Land Rover Discovery Sport Dynamic. The spate of new launches is expected to boost sales.
At the current market price of Rs 405, there I still upside potential in Tata Motors.