If you are new to investing you do not want to begin the investing journey with high risk high beta stocks, that can result in losses. There have been many beginners to stock investing in India, who have invested money and never recovered that money. Once the disappointment sets in, you do not want to ever invest again. So, a good idea would be to stay focussed on quality stocks, which are not very high beta and have sound fundamentals. Here are a few stocks that we have picked.
Century Plywood will be one of the big beneficiaries as the transition continues to take place to organized players from unorganized players, after the introduction of the Goods and Services Tax.
Century Plywoods reported a subdued set of results for the quarter ending March 31, 2018. While plywood volumes rose 7 per cent, laminates saw a healthy growth of 17 per cent. MDF would continue to drive growth in the coming years for the company. The management of the company believes that a topline growth of 20 per cent in 2018-19 is possible.
An EPS of 13 is possible by 2019-20, which should take the stock to of Century Plywoods levels of Rs 325, assigning a p/e of 25.
The stock has already fallen from levels of Rs 360 to the current levels of Rs 243.
Hindustan Media Ventures Ltd
Hindustan Media Ventures (HMVL) publishes"Hindustan", the third largest read Hindi newspaper in the country.
The company has been reporting a subdued financial performance in the last few quarters, as pressure remain on account of intense competition. However, there are a few things that could work in favour of Hindustan Media in the coming months.
HMVL was largely impacted in the last quarter because of RERA and GST, which saw advertising revenue being hurt. However, the management remains confident that the next year could see an improvement and there are reasons to remain optimistic.
One of the big reasons is that elections are round the corner, in some big states, which should improve advertisement spends. With central government elections slated for 2019, the spends could be really very large.
Hindustan Media: Huge potential
"Hindustan" newspaper is the number one circulated newspaper in Bihar and Jharkhand. The company is now looking to expand gradually into key markets and its cash flows can allow it do so.
Though advertising revenues for the quarter ending March 31, 2018 were flat, the company managed to maintain its market share and also improved yields. Going ahead the company is looking at persistent investment in copies in its core markets.
It is also aiming at better monetization of copies through better yield. It is likely that along with advertisement recovery, we would see better performance of the company in the coming quarters.
Hindustan Media: Cheap on valuations
Hindustan Media Ventures is one of the cheapest available media stocks at the moment.
For example, the stock is trading at a p/e of under 9 times one year forward earnings of Rs 24. In fact, the price to book value on trailing basis is just 1.4 times.
The company has had a bad quarter, though we expect things to turn this quarter with advert spendings increasing due to the festive season.
In about 12 months from now, there would be the national elections and we would see HMVL benefiting from huge advert spends.
The stock is undervalued at the current levels and investors would do well to buy the stock on declines. A price of Rs 300 on the stock is not far fetched at all.
Coal India is a good stock for those looking at limited downside risk from the markets.
The stock is one of the best stocks for an attractive dividend yield. Tax free dividend of up to 6 per cent at the current market price of Rs 269, makes the stock a good pick.
Apart from this the company is a cash rich and has no debt on its books. It faces very limited competition and coal prices are unlikely to fall anytime soon. A good pick at the current levels. We are recommending this stock for beginners, as the shares have very limited downside risk from the current levels.
How shares are taxed?
Beginners to investing in shares should now understand the tax implications especially after the Union Budget.
There is a long term capital gains on tax that is applicable if you now sell shares after 1 year. The Union Budget 2018 has once again introduced this tax. Now, if you make a profit of more than Rs 1 lakh, you need to pay 10 per cent as capital gains tax. Short term capital gains tax on shares would continue to stay at levels of 15 per cent.
Beginners to investing should note these changes before investing.
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.