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.
Gitanjali Gems is a stock that is not exactly under Rs 50, but, is more like Rs 64. Gitanjali is one of the largest retailers of branded jewellery with the group owning several popular brands like Asmi, Sangini, Naskhatra, Gili etc. The group owns seven facilities spread across India and Thailand with a manufacturing capacity of nearly 8.1million pieces. According to the company 8 of the top 10 jewellery brands in the country are owned by Gitanjali group. Fundamentally, the stock seems undervalued given that the price to book value is just 0.17 times. The company is a profit making dividend paying company. For the year ending March 31, 2017, the company reported an EPS of Rs 4.46. This means the stock is available at a discounting of 13 times. The company has also bought down its debt to equity ratio in the past few quarters, which is a big positive. Gitanjali Gems maybe a good high return, high risk bet in the coming days.
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 too 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 network in the coming days. A good stock to own near the Rs 50 levels. Check stock quote of IDFC Bank
This is one PSU Banking stock that has been languishing for sometime now. We believe that the next few quarters would see performance recovery from government owned banks. There are also talks that the smaller banks like Dena Bank would be merged with the larger government owned banks. If this happens we could see a fresh rally in government owned banks. Not a bad bet at the current market price of Rs 33. On a fundamental basis this stock looks risky given the huge mounting losses at the bank. However, again this is more a play on the restructuring at government banks more than anything else.
Gammon India is associated with some of the finest construction projects including the Construction of the foundations of the iconic Gateway Of India, Mumbai in 1919. It also constructed the longest railway tunnel in Asia for Konkan Railway at Ratnagiri, The longest urban flyover at Hebbal for the Bangalore Development Authority - 5.3km, Terminal building for Sharjah International Airport and a host of other projects, which are prestigious.
Recently, the stock surged after the National Highways Authority of India, awarded the company some orders.
At Rs 9 the stock has the potential for an upside, as the government's development agenda, will help the company, particularly in roadways and infrastructure. Remember, this company has some solid expertise in infrastructure projects in the country.
This stock is currently trading at Rs 50. We like the stock for a number of reasons. The first is that non performing assets of the banking sector may have peaked.
Secondly, there has been capital infusion in government sector banks and lastly there is likely to be a turnaround in performance of public sector banks.
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.
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. Not a bad bet at Rs 37.60.
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.
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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