Markets have scaled a new high in the last few days. The Sensex and the Nifty p/e multiples continue to remain at elevated levels, as results have been poor. In fact, the Sensex p/e at 20.65 times is not very cheap, considering the historic average of 17 times. Nonetheless, if you are investing now it is best to do so in small amounts. Here are a few stocks that you can buy and reap money in the more long term.
Indian Oil is the largest oil company in India in terms of turnover. It accounts for nearly 35 per cent share in refining and is one of India's largest commercial enterprises. The company was also ranked 161 by Fortune among the top global companies. Shares in India Oil have fallen recently and this is one reason to recommend the stock. The other reason is that the Paradip Refinery has now begun contributing and should enhance the gross refining margins due to its complexities. By FY 2019, the company can report an EPS of Rs 35. The shares have dropped to Rs 372 from 450, making the p/e multiple at just about 12 times. The dividend yield is also pretty decent at 4 per cent.
Hindustan Petroleum (HPCL) reported a superb set of numbers for 2016-17. The stock recently went ex bonus and is currently trading at Rs 384. Now, there are a few triggers for the stock. The first is that the Oil and Gas Minister stated that the HPCL's buyout to ONGC is likely to happen shortly. There are reports that ONGC may have to pay a higher premium for HPCL, which should drive the stock higher. There are also reports that the company will pay a higher one time dividend. This has already led the stock to be traded higher. HPCL from a valuation point of view is also not very expensive. It continues to trade at p/e multiple of around 8 times with a dividend yield of near 5 per cent.
Check stock quote of HPCL here
NMDC is a government owned company that is into iron ore mining. The stock has fallen from levels of Rs 140 to Rs 110 and is back to levels of Rs 120. Iron ore prices have recently shown a rising trend and we might see that reflecting in NMDC's numbers. The dividend yield on the stock assuming that it maintains the dividend of Rs 11 per share around 9 per cent. The company's business has few risks given that the steel industry to whom it supplies iron ore continues to grow well. The company is also a cash rich, debt free company.
The stock of this company has fallen from levels of close to Rs 900 to the current price of Rs 727. This is in line with the large scale stock destruction that we have seen in several pharma stocks. Most of the stocks have fallen to 52-week lows as investors continue to hammer down shares from the pharma and the IT space. If you are looking to buy this stock, it is one of the cheap pharma stocks available in terms of p/e. The stock is trading at a price to earnings multiple of just 13 times projected EPS of 54 for 2018-19. The shares are not a bad bet from a long term point of view.
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 do not own any shares in the above mentioned stocks.