Markets saw good selling pressure this week, after india reported surgical strikes near the line of control. Worries over Deutsche Bank also rattled global markets, which pushed global indices, including the Indian markets lower. However, there are select stocks that maybe a good buying opportunity at the current levels, after a near 2.5 per cent fall in the market this week.
Shares in ICICI Prudential got listed on Thursday. The stock dipped to a low of as much as Rs 293, against an IPO price of Rs 332. The stock is now trading at Rs 311, which is again a discount of 8 per cent over the IPO price.
If you have a holding period of 5 years, this stock can generate excellent returns. Indian life insurance continues to be under penetrated.
ICICI Prudential has performed well in the last few years. The company reported an EPS of near Rs 12 last year.
If the company can report an EPS of Rs 20 in the next few years, the stock should trade near the Rs 450 levels. Not a bad bet, if you have a slightly long term perspective in mind.
Mahanagar Gas supplies domestic gas to a large metropolitan city like Mumbai, where it enjoys virtual monopoly. The company came-up with an IPO only recently at a price of Rs 421 and the shares are trading at Rs 665.
The reasons for recommending the stock of Mahanagar Gas is two-fold. The first is that there still exists a huge potential in Mumbai, which remains an under penetrated market for the supply of gas.
Mahanagar Gas will soon roll-out its Raigad operations, which would be another positive for the company.
Prices of gas would continue to be benign, which would benefit the company immensely going forward. We expect the company to report an EPS of Rs 35 for FY 2017-18, which should take the shares to at least Rs 700, based on p/e 20 times.
Stocks like NMDC are free from too many risks. Even if the markets fall, a stock like NMDC gives you a good dividend yield of near 7 per cent, tax free.
NMDC is a cash rich company, which is free from debt. The company also has some solid expansion programmes, without two much addition to debt.
Mining of iron ore is a good and high margin business.
The stock is a low risk bet, as compared to highly volatile stocks from other sector like banking. One is at least assured of regular dividend. A risk free bet at Rs 107.
Quickheal Technologies, is one of the largest anti virus software companies in India with a market share of 30 per cent.
It is a good idea to buy into the stock as the price is significantly lower than the IPO of Rs 321. In fact, you are getting the shares at a price of Rs 218, which is almost a Rs 103 discount to the IPO price of Rs 321.
We believe the company can report an EPS of Rs 18 for 2017-18, which should take the stock to a price of Rs 350 at the very least, in the next couple of years.
Coal India is not too different from NMDC. The stock is a cash rich dividend paying company into the highly profitable coal mining business. At a time when there are geo-political tensions, it is best to bet on highly profitable cash rich companies.
Again, like NMDC this is a cash rich dividend paying company, which can be a good pick for the longer term.
At Rs 322, you get a dividend yield of as much as 7 per cent.
We like Aro Granite for a number of reasons. The first is that the implementation of GST will benefit a company like Aro, as the organized sector would come under the ambit of taxes.
The second is that the company reported a whopping growth of 150 per cent in net profits for the quarter ending June 30, 2016.
The third is that the stock is clearly undervalued. The company is likely to report an EPS of Rs 12 for FY 2016-17. This leaves the stock trading at just 6 times, at the current market price of Rs 72. A goo stock to hold for the long-term.
Andhra Bank at Rs 56, is not a bad bet, if you are looking at economic recovery in the next few years. We believe that non performing assets will fall in the coming years and the best way to play economic recovery is to buy government owned banks.
Those with an appetite for risk, can buy Andhra Bank.
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