Your Stocks is a daily show where market experts answer your specific stock related queries.

In July 13 edition of Your Stocks, Mayuresh Joshi of Angel Broking and Rajat Bose of rajatkbose.com, answer your queries on investments in the stock market.

Vimal Mago holds 300 shares of Orchid Pharma at Rs 51 per share since nine years. She is a long-term investor and wants to know whether to hold or sell?

Joshi: I think large element in terms of what has probably happened with the stock and the consequent correction that you have seen, my own sense is that even if she is making losses, I think it's better off looking at alternate stocks. So, with that viewpoint and bottom-up approach, Music Broadcast is something that I will like on declines in a staggered way.

What the stock has done in comparison to ENIL in terms of financial performance, the topline has grown at 18.5 percent, the margins have been far better, 33.5 percent and this subsequent reflection has been seen very clearly on the bottoline, which has grown at 32.5 percent.

If you look at their balance sheet, it's absolutely cash rich. You are probably talking about the capex for 39 licenses out of its way, the advertising volume growth has been substantial to industry. So, with a lot of political elections expected to come around over the next few months, consequent shift in terms of advertisement revenues and volumes going up augurs well for a company like Music Broadcast, which already has a market leadership position in Mumbai, Bengaluru and Delhi. Again, the earnings trajectory should be very strong and even if it I assume an EPS of Rs 16, there seems to be potential upside on to the stock over the next one year. So, I think Music Broadcast is an alternate that the investor can probably look at.

Maya Patel holds 36,000 shares of Reliance Communications at Rs 20.50 per share since nine years. She is a long-term investor and wants to know whether to hold or sell.

Joshi: I think it's a very difficult call to take, but a large element in terms of how this stock has probably performed in terms of its own financial and operating performance, I think the stock price itself is reflective of what has probably transpired. But an alternative is something that I can suggest to the investors with a long-term perspective, because our entire premise of probably staying with good qualitatively large and midcap stocks will probably derive the strong earnings momentum and subsequent return on investments (ROI).

So, alternate investment that I am looking at that the investor can probably do is Bata India. What the stock has done in terms of store expansions. It's expected to open 500 odd stores over the next four-five years. A lot more products are getting introduced into this sub-segment and again the expectations are having a very strong earnings momentum. So, our own sense is 17-18 percent topline growth, probably looking at 22-23 percent bottomline growth and margins are expected to sustain around that 14-14.5 percent mark. Cash on books at Rs 588 crore as on March end is very supportive in terms of what can come through in terms of yields as well and a large element in terms of that product mix along with same-store sales growth (SSG) of their existing stores should propel earnings growth. So, alternatively the investor can look at Bata India. There are some investments that are done, but unfortunately, you should get over it and look at stocks that can probably deliver better returns over the next 12-18 months.

Media and entertainment stocks are down anywhere between 11-12 percent, what do you think the impact of the ruling be in terms of their earnings, any numbers off your hand?

Joshi: Two aspects to look out for the average. Ticket price is obviously for movie exhibitors like PVR on their higher side, expected to be Rs 205-210 range. Food and beverage (F&B) as you rightly pointed out, though the contribution to the topline might be around 26-27 percent odd, the operating contribution is significantly higher because it's a high margin business. The third element in terms of whether this thing is actually applicable from a certain date of point that needs to be found out in a greater detail.

If this is actually allowed, you rightly pointed out what is the kind of impact that it actually has in terms of for the outlet sales specifically at movie screens in Maharashtra and the outside risk, whether other states will probably replicate this entire scenario through their own legislative mechanism. So, large element is going to be the overhang that can probably come through in terms of the hit that they can take probably in terms of their F&B revenues. The advertisement revenues are quite fine, they are holding it up, but this hit can probably have them, if it's implemented and if this is the circular that has come out for August 1 or whatever the date is, I think the earnings hit can be quite substantial. We will need to wait and watch for the fine print.

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First Published:Jul 13, 2018 4:09 PM IST