Graphite India

Graphite India is a company that manufactures Graphite Electrodes. The stock price of the company has collapsed from levels of Rs 1200 to the current levels of Rs 465. The fall has largely been on account of subdued, Graphite Electrode prices.

Graphite electrodes find application in the making of steel. The prices of the latter has fallen on account of the slowing of the Chinese economy. Hence, graphite electrodes prices have dropped. On the other hand a key input, needle coke has also seen some upward movement, which has squeezed the margins for the company.

If prices of needle coke continue to remain elevated, it may impact the performance of Graphite India.

Cheap on the valuations front

Despite a squeeze in margins, we believe that this stock is one of the cheapest in terms of valuations. The company reported a net profit of Rs 764 crores for the quarter ending Dec 31, 2018. The company has a very small equity capital, which is why the EPS was huge.

In fact, the margins are high despite a rise in needle coke prices, which should result in an EPS of Rs 100 for 2019-20. Even if you discount the EPS by a reasonable p/e of 10 times the stock should quote at Rs 1,000.

Graphite India is a stock that is undervalued and also offers a dividend yield of near 4 per cent. A good stock to buy for the long term.

South Indian Bank

South Indian Bank has been reporting a subdued set of results for the last few quarters. However, we do believe that the stock offers an excellent opportunity for medium term gains.

To begin with, the pain in the banking sector maybe done. Most of the banking NPAs may see a gradual fall in the coming quarters.

South Indian Bank has also been focusing on increased emphasis on the retail sector, which could bear fruits in the coming quarters.

The stock is trading at a p/e of just 10 times one year forward earnings and is among the cheapest stocks available in the private sector banking space.

Disclaimer

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.