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.
Balrampur Chini Mills
Balrampur Chini Mills is one sugar stock you would likely to own for a number of reasons. It is the second largest sugar manufacturer in the country and has over the last few quarters been improving its financials. Apart from this the company has taken a number of encouraging measures.
The company was the first to have instituted ‘cane on wheels' to collect cane directly from the incoming vehicle, rather then dumping on the ground.
The Company had a gearing of 0.13, following debt repayment of Rs 471.85 crore in 2016-17. The Company has widened the coverage of superior cane varieties from 4.87 per cent of its command areas during sugar season 2013-14 to 41 per cent during sugar season 2016-17.
Balrampur Chini Mills: Strong on fundamentals
The company recently initiated a buyback of shares, which will reduce the equity capital further.
The only worry for the next one or two quarters would be the drop in sugar prices, because of huge supply, which may erode profitability. However, the company has moderated the impact by diversifying into downstream processing. This may tend to insulate the company a little.
However, what is the most significant reason to invest is that the stock has fallen from levels of Rs 180 to the current price of Rs 68. This is the lowest level for the stock in ore than two years.
Even if sugar prices dip, the share is quoting at a p/e of just about 7 times. A good stock to buy for the long term. Check stock quote of Balrampur Chini here
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 Dec 31, 2017 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 280, 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 as 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.