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. All of these stocks are under Rs 50.
Super projects executed
IVRCL has some superb projects that are being executed and are under execution.
a) Punasa Lift Irrigation Scheme, value Rs 419 crores.
b) Mid Manair Reservoir Project, value Rs 268 crores.
c) Nahita Chevella LIS Package-20, value Rs 893 crores.
d) Sripada Sagar Project Stage - II, Phase - I, value Rs 603 crores
It has almost 11 large size irrigation projects.
2) Buildings and Industrial sector
a) Secretariat Building at Naya Raipur (NRDA)
b) ONGC Mangalore Petrochemical Ltd: Construction
of internal roads, stormwater drain etc.
c) Telcon Factory at Kharagpur - Phase II, III
d) Solapur Super Thermal Power Project stage -II
a) Karanji - Wani - Ghuggus - Chandrapur Road, value Rs 692 crores.
b) Indore - Jhabua - Gujarat/MP BOT, value Rs 1394 crores.
c) Byappanahalli Station - phase-1 - BMRCL: Construction of two metro stations
Projects in Saudi Arabia, Kenya, Tanzania Rwanda etc.
IVRCL recently sold two road assets to Cube Highways, which is a Singapore based company. These two assets were road subsidiaries - Salem Tollways and Kumarapalayam Tollways.
The company hopes to pay-off some debt, through the sale proceeds, which would reduce its overall debt liabilities. The company has debt liabilities of around Rs 8,500 crores and is part of the debt restructuring exercise. With the Insolvency and Bankruptcy Code, it may find the best possible suitors who are willing to infuse fresh money or takeover the company.
IVRCL has some of the finest projects in water sector, power and infrastructure under implementation. If it could successfully handle its debt woes, or if another company takeover the stock could rally from its current levels.
The shares at Rs 4.95, offers limited downside risk. IVRCL has good track record and expertise, but, needs to come out of debt problems. In fact, if there is a suitor for the company the shares could rally.
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 30 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 Dec 31, 2017, came in at 3.40 per cent, which is still reasonable when compared to a host of other banks. Interestingly,this was a drop from the previous quarter level of 3.57 per cent.
South Indian Bank can report an EPS of close to Rs 2 for FY 2017-18. The stock is trading at a p/e of just 14 times one year forward earnings. This is a private sector bank that definitely deserves better discounting. This makes the stock a good bet at the current level. Buy for long term capital gains.
Hindustan Construction 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.
The government's ongoing thrust on infrastructure development could boost the prospects of the company in the coming years. HCC reported very good numbers for the quarter ending Dec 31, 2017, wherein net profits surged to Rs 31.31 crores from Rs 11.60 crores in the previous quarter.
With a healthy order book position HCC will continue to do well.
The stock is a good bet around the Rs 36 levels.
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
The article is not a solicitation to buy, sell in securities or other financial instruments. Greynium Information Technologies Pvt Ltd, its subsidiaries, associates and the author do not accept culpability for losses and/or damages arising based on information in this article.
The author and his family own some of the shares mentioned above, at the time of writing this article.