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Talking Stock: Hold KEC, Hindalco; exit UPL, ITDC

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By G ChokkalingamFounder - CIO Equinomics Research - AdvisoryI have 50 shares of National Peroxide at a price of Rs 3,200 and another 50 at Rs 4,200.

Can you please advise on what I shoud do? -PIYUSH SONIYou have entered this stock at the peak of the bull run in the prices of both hydrogen peroxide and stock.

Now hydrogen peroxide prices have crashed.

For you to recover the cost in the stock, hydrogen peroxide prices need to rise around 100% from the current level which is very difficult in the short to medium terms.

Hence, I suggest exiting the stock, if it moves up to around Rs 2,300 as it is now trading at exorbitant valuation. I have recently purchased ITDC at Rs 322, KEC at Rs 298, UPL at Rs 588, Hindalco at Rs 216, SBI at Rs 328.

Please advise me on how these shares will fare.

-MURARIPRASHADIn terms of earnings, ITDC is too costly a stock but enjoys premium valuation partly due to a very small floating stock, in my view.

Hence, exit if it moves 10% or so beyond your cost price.

Hold KEC International with a target price of around Rs 350 which is a fair valuation of around 15 times one-year forward earnings.

I suggest exiting UPL if it moves up even 5% to 10% considering a heavy debt position post the acquisition of Arysta LifeScience.

You may re-enter if UPL succeeds in gaining the growth momentum post this big global acquisition.

Hold Hindalco with a target price of around Rs 240 and SBI with target price of around Rs 370.

While possible resolution to the US-China trade war would be a positive development for the metal sector, SBI can gain from speedy resolution from NCLT cases and also on expected recovery of India’s GDP growth. I am holding 7,000 shares of 3i Infotech at Rs 7.

Please advise.-H N JAJUHold 3i Infotech with a target price of around Rs 3.20 which is a fair value on the basis of PE (10x) and enterprise value to annual revenue (1.4x).

As it has added a significant amount of fixed assets in the current year, hold it with a higher price target in case the company starts improving revenues and profits significantly from Q4FY20 onwards. I have 3000 shares of Nector Life bought at Rs 27.30.

Please advise.-ASHOK KPoor single-digit operating margins for the last three years for this lif e sciences company and very low dividend payout do not give much comfort on the valuation of the stock.

Hence, exit the stock if it moves close to Rs 18/ which is a fair value in my view. I have 1000 shares of Bajaj finance.

Shall I buy or hold? -GAJARIAI continue to believe that the current valuation of Bajaj Finance (around eight times price to book value of FY20) is too costly and hence, suggest booking profits if the stock rises a further 5% or more. I hold Arvind Remedies at Rs 63.25, Goa Carbon at Rs 1,021, Graphite India at Rs 706.

Need your advice with respect to the next steps — hold or exit? -ALPANAAfter making huge losses, Arvind Remedies got suspended from the stock market and therefore, nothing can be done to get back your investment from this stock.

You may hold Graphite India with a target price of around Rs 360, which is 8x FY21E earnings.

Having lost nearly 80% of your capital, you may hold Goa Carbon if you can take further risk and wait for the next possible bull run in calcined petroleum coke prices to exit the stock.

You have entered these two chemical stocks after they ran up 10-12 times in about two years.

Please understand the fact that both chemical businesses and stock markets are cyclical.

While convergence of these two cycles at the peak create phenomenal wealth for the smart investors (who entered the stocks at the early stage), on down cycle of convergence, it destroys wealth of the investors, who entered the stocks at the peak prices. Please send your queries on Stocks to This email address is being protected from spambots.

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