The Nifty has risen to new peak levels, while the Sensex has crossed the 38,000 mark for the very first time. One must admit that the valuations are still not very cheap. However, there are many stocks that are near 52-week lows. Here are a few that could be worthy picks at these levels.
Punjab National Bank
Shares of Punjab National Bank, may not exactly be at a new 52-week low, but, at levels of Rs 80, the stock maybe an interesting bet.
Firstly, one interesting thing that we are noticing after the quarterly numbers of most government owned banks is that gross non performing assets have started reducing marginally, while provisioning is falling.
In fact, some banks like Union Bank of India have even reported a decent profit. It is likely that most of the better managed PSU banks should return to profitability in the next two to three quarters at least. What is interesting about PNB that it has provided for bulk of the losses suffered on account of the Nirav Modi case.
In another two quarters, the entire provisioning from the Nirav Modi losses should be over.
PNB: A value pick
Interestingly, also the bank still has a large stake in PNB Housing Finance and PNB Metlife, where it plans to trim down its stake. At least PNB Housing Finance should fetch Punjab National Bank Rs 8,000 crores.
This would help the bank shore up its capital. Apart from this it is also looking at selling its erstwhile headquarters for about Rs 700 to Rs 800 crores. It has already sold stake in BSE, Crisil and ICRA.
PNB has made huge recoveries of almost Rs 8,500 crores in the quarter ending June 30, 2018.
PNB is an excellent banking franchisee with a solid branch network of 6983 branches. We believe the pain that the bank has suffered should be dramatically reduced in the next few quarters. If you are willing to bet for the next 3-years, this maybe a good stock.
SBI Life Insurance
SBI Life Insurance recently came-up with an IPO at a price of Rs 700. The shares are now trading at Rs 655, which is below the IPO price.
The company is a joint venture between SBI and BNP Paribas. At the time of the public issue, many brokerages had placed a buy call on the stock.
At the current price the stock is still trading at a very high p/e of almost 55 times. However, the heavy discounting is largely on the back of the strong potential in the insurance business.
SBI Life: Buy on dips
While the p/e ratio is still high for the company, at the current market price of Rs 655, the company is trading at P/EV multiple of 3.5 times, which is reasonable.
The stock can be bought on declines only, as valuations continue to remain lofty. However, it also has more to do with the current market scenario, where valuations for most stock prices that are into the life and general insurance business are high.
Investors who can hold the stock for 3-5 years can gain from the growth prospects the company may show, due to the under penetrated insurance business.
Shares of Tata Motors have plunged to Rs 249, which is very close to its 52-week low of Rs 247. Largely, the fall has been on account of numbers that lagged estimates.
Net loss for the quarter ending June 30, 2018 was at Rs 1,862 crores. The loss was startling on account of below than expected sales from the Jaguar Landrover in key markets. However, what was encouraging was the solid recovery in the domestic business. Volumes and sales, both surged as there was a strong recovery in every segment including commercial vehicles.
New launches to drive growth
However, new launches especially from Jaguar Landrover will drive growth in the coming quarters. In fact, a stronger fourth quarter is likely to be driven by new models, seasonality and improved profitability. Jaguar Landrover is also expected to launch its first electric car, the Jaguar I-Pace and Range Rover plug-in hybrid later this year.
What is also encouraging is the fact that there maybe a robust recovery in markets like the US and China, which are key markets for the company. This could propel sales of Tata Motors' JLR brand in the coming quarters. This is a good stock to buy at 52-week low levels.
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