Markets have lost heavy ground with the Nifty losing as much as 1,000 points or near 9 per cent in the last few weeks. In fact, the slide which began after the Union Budget has failed to cease. Here are a few stocks that you could buy after the recent decline.
Karnataka Bank shares have been hammered down in line with most banking stocks. The shares are now available at a near 52-week low of Rs 116. At these levels the stock is a good pick for a number of reasons. The first is that at these levels the dividend works out to a near 4 per cent, if the bank maintains a similar dividend of 50 per cent like it declared last year.
There is no reason to believe that the bank will not retain the dividend that it declared of last year. The bank recently crosses a business turnover of Rs 1,02,182 crore, surging past the 1 lakh crores mark.
The bank has a strong presence of 607 branches in South Indian but is now quickly embarking on expansion in the North as well.
Karnataka Bank: Sound on fundamentals
The shares of the bank are extremely sound on fundamentals. The bank also reported good numbers for the quarter ending Dec 2018. The net profits surged to Rs 87.38 crores for the period from Rs 68.52 in the corresponding period of last year.
Interestingly, the gross NPA at the bank fell to 4.30 per cent for the Dec quarter from 3.97 per cent in the corresponding period of last year. Net NPAs at the bank also declined in line. the bank has no major concerns on the asset quality front and has increased retail lending. The shares are available at a one year forward p/e of just 8 times. The stock is also quoting below book value.
A good share to buy at the current levels of Rs 116. Check stock quote of Karnataka Bank here
J M Financials has recently recommended the stock of Phoenix Mills. The company runs the Phoenix Malls across major cities in the country.
Phoenix Mills (PHNX )'s third QFY 2018 profit increased 46 per cent (year-on-year) as reduction in interest cost and improving operations across assets improved profitability.
Consumption and trading density of its retail assets grew 8 per cent and 6 per cent (year-on-year) respectively. "While Kurla and Bangalore malls recorded consumption increases, Chennai and High Street Phoenix (HSP) saw muted consumption growth during the quarter," JM observed in its report.
Phoenix Mills: Target price of Rs 650
J M Financials has set a target price of Rs 650 on the stock of Phoenix Mills.
"Our NAV-based target price of Rs 650 (March 2019) is derived valuing retail assets on a lease basis assuming perpetual ownership (cap rate 8%, HSP/MC 39/43% of NAV); development projects on a DCF basis (12% of NAV); and strategic investments at 1x and hotels at 20x EBITDA (5% of NAV). With most capex/buybacks complete, cash flow deployment will be a key monitorable going forward. Key risk will be increase in interest rates.
"We expect market - leading malls to have a significant advantage over next 3 - 4 years as low competition will lead to improvement in consumption and rentals. We maintain buy with a revised target price of Rs 650 (Mar'19)," the firm has said.
This is another banking stock that has fallen largely on the back of a collapse in the price of banking stocks, following the PNB scam. However, all banking stocks cannot be painted with the same brush.
Federal Bank has had a very good set of numbers for the quarter ending Dec 31, 2018. The bank reported its highest ever Net Interest Income at 950 crores. The NIM at 3.33 per cent increased sequentially as well.
The bank is available at a price to book of around 1.5 times, as the book value has now crossed the Rs 60 mark. The company is also available at a dividend yield of around 1 per cent. The stock has fallen from level of Rs 127 and maybe a good pick now at Rs 89.
Hindustan Petroleum is another stock that is not very far away from its 52-week low. The stock remains an undervalued stock fundamentally and is largely a good pick for its dividend yields. In fact, the yields are much better at almost 9 per cent, if one considers that the company declared a dividend of almost Rs 32 per share last year.
For the current year, it has gone ex-dividend for Rs 14.2 dividend declared earlier in Feb. However, dividends are subject to profitability and we believe that profits at the company are unlikely to dip anytime soon.
So, it is likely to maintain the same dividends, which means your dividend yields are high. The stock is also available at a p/e of 6 times one year forward earnings. A good bet at the current market price of Rs 357.
Taxation on shares
One important thing to note is that long term capital gains on shares would be taxed with effect from April 1, 2018. This means that TDS at 10 per cent would be payable if you sell your shares after April 1, 2018. So, investors needs to be careful before investing and understand that both short and long term gains would now be applicable on shares.
This article is strictly for informational purposes only. It is not a solicitation to buy, sell in securities or other financial instruments. Greynium Information Technologies Pvt Ltd, its subsidiaries, associates and the author of this article do not accept culpability for losses and/or damages arising based on information in this article.