Lower share prices, need not necessarily be the best and investors should know, that there are risks. Having said that, there are also stocks that can give good returns over the more long term. We warn investors, that these are high risk stocks, and invest in them, if you have an appetite for risk. Most of these stocks are under Rs 50.
Zee Learn is among India's top education company with the fastest growing chain of K-12 schools - Mount Litera Zee School and Asia's No 1 chain of pre-school network - Kidzee in its portfolio.
It also operates the Zee Institute of Media Arts (ZIMA), a TV and Film training institute in Mumbai that offers diploma courses in Direction, Acting, Sound, Editing, Production and Cinematography. Zee Learn also has Zee Institute of Creative Art (ZICA) a full-fledged Classical and Digital Animation Training Academy.
Zee Learn: Stock has potential to rally
Zee Learn has aggressive plans to expand and capitalize to cater to the needs of the education sector. The company also has a very asset light model. Recently, Zee Learn ventured into manpower recruitment and training through one of its subsidiaries. It is likely that Zee Learn will post strong growth in the coming quarters on account of the many initiatives that it is taking.
The company can post an EPS of Rs 3 by 2018-19. If we value the company at a 20 p/e the stock should trade at Rs 60. This means an upside of at least 50 per cent over the current levels.
South Indian Bank
If you are looking to invest in banking stocks, that have the potential to generate returns in the long term, South Indian Bank should be a good bet.
The stock is trading at relatively reasonable valuations. The gross NPAs for the quarter ended June 30, 2017, came in at 3.61 per cent, which is still reasonable when compared to a host of other banks. Going forward this is only expected to improve.
For the quarter ending June 30, 2017, the bank reported an EPS of Rs 0.56. Even if it ends up doing an EPS of close to Rs 2.5 for FY 2017-18, the stock is trading at a p/e of just 12 times one year forward earnings. This makes the stock a good bet at the current level. Buy for long term capital gains.
This stock is not exactly below Rs 50, but, somewhat near Rs 57. The bank is a well managed private sector bank and is available at decent valuations. In fact, IDFC Bank has fallen from levels of Rs 84, which it rallied to recently to the current levels of Rs 57. The bank has its non performing assets well under control, unlike government owned banks where the numbers are all over the place.
If you are prepared to hold the stock for about 5 years it could give very good returns. Rapid expansion in branch network coupled with stable net interest margins, should augur well for the bank.
Reports of recent merger with the Shriram City Union may boost the banks retail customers in the coming days. This is largely because of the huge customer bases that Shriram City Union has. A good stock to own near the Rs 50 levels. Check stock quote of IDFC Bank
Hindustan Construction is like Gammon India and has built some of the finest projects in the country, including the iconic Bandra-Worli sea link, first Thermal power plant in Mumbai, first water treatment plant in Mumbai, first underground power house in Bihar, first port impounded dock in West Bengal, first nuclear power project.
The list of firsts to the company's name are plenty. Recently, the company said that it can reduce debt by half, after the company allowed arbitration awards to be settled quickly.This would halve its debt, which would see profits shoot-up sharply.
HCC also recently received an award for the construction for the Bangalore Metro project. The award of the contract was almost Rs 800 crores. This project is to be executed in 36 months. The government's ongoing thrust on infrastructure development could boost the prospects of the company in the coming years.
The stock is a good bet around the Rs 32 levels.
This stock is currently trading at Rs 40.65. We like the stock for a number of reasons. The first is that non performing assets of the banking sector may have peaked.
Secondly, could be fresh capital infusion in government sector banks and lastly there is likely to be a turnaround in performance of public sector banks.
Also, consolidation in the banking sector through mergers, should augur well for the bank.
Yes, the bank has seen a spike in NPAs like most other banks, but, we expect that situation to improve in the next 2-3 years, by which time you may not get the shares at the current levels.
A good buy if you want to hold the shares for 2-3 years.
Exercise some caution
It is best to exercise some degree of caution, as the stocks recommended may or may not be fundamentally the best. Stocks under Rs 50 are generally small cap stocks, whose price can be extremely volatile. In some case the downside risk is very low, given the huge destruction already in the stock. Remember, if you hold for a longer period of time, there maybe some possibility of making money. We have also recommended some small cap stocks here
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