There are many beaten down shares in India, that have the potential to rally and hence make money for investors. The problem right now is that the markets have rallied so much, that if you do not look at these stocks, you may lose a good opportunity. Let us see a few of these stocks.
Shares in Divis Labs have plunged from 52-week high levels of Rs 1,380 to the current levels of Rs 633. The company has faced regulatory hurdles with the USFDA. If you want to export products to the US, you have to get an approval from the US FDA, which comes and does a thorough inspection of exporters plants, before they can be exported to the US FDA.
Recently, the US-FDA issued an import alert on the products manufactured by Divis Labs Unit-II at Visakhapatnam, Andhra Pradesh. This means that products manufactured by this unit cannot be exported to the US.
Rationale for buying into the Divis Labs Stock
Many analysts estimate that the damage by the US FDA import alert may not be very severe. This is because the damage done to the company will be only about 10-15 per cent of the revenue could be hit. Another positive is that 10 products of the company have been excluded from the import alert ban.
Another thing is that in 2015-16, forty per cent of the company's revenues came from exports to the European markets, which had a much larger share than US markets. We believe that the damage done to the stock is far more higher than necessary. The company for the quarter ending December 2016, reported an EPS slightly more than Rs 10. Even if you assume that the company does as EPS of Rs 38 for 2017-18 considering the import alert ban the stock is trading at just 16 times one year forward earnings. This is not at all. Check stock quote of Divis Labs here
The stock of Infosys too is not a bad bet considering that it has fallen as much as 30 per cent from peak levels. Yes, the quarterly numbers were muted and the company did not report a few bad quarters, but, the share price has also moved in tandem with quarterly numbers. We believe that the stock is a good bet and let us see some reasons for the same.
Higher dividend yields from Infosys
Infosys plans to distribute at least 70 per cent of its free cash flow, commencing from 2017-18. We believe this could lead to the stock giving a dividend yield of at least 5 per cent. Against, the stock at a price of Rs 920 is quoting at a p/e of just about 14 times one year forward earnings. This not expensive at all and hence a good bet at the current levels, considering that you can get as much as 5 per cent dividend yields.
Like Infosys, Coal India too is a great bet. Firstly, the stock dipped from levels of Rs 320 to the current levels of Rs 277. There were reports that certain mines were downgraded by the company for poor quality of Coal, which could impact profitability of the company.
However, Coal India has always been an excellent play on dividend. If the company were to even maintain a dividend of Rs 20 per share for 2017-18, one can get a dividend yield of 7 per cent at the very least. This makes Coal India an excellent bet at the current levels.
This stock is very close to its 52-week low, which makes the stock a great bet at current levels. Check stock quote of Cal India here
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