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

In July 25 edition of Your Stocks, Mayuresh Joshi of Angel Broking and Rajat Bose of rajatkbose.com, answer your queries on investments in the stock market.

Monark Shah writes to us from Pune. He holds 44 shares of ICICI Prudential Life Insurance at Rs 334 since its IPO. He is a long-term investor and wants to know whether to hold or sell?

On the numbers front, a tad bit disappointing, but one should realise and understand that the base that you are probably working year-on-year comparison and the demonetisation and the GST effect, so I think a large element in terms of 4-6 quarters prior to this number, a lot of inflows probably came in to the insurance sector as well. I think in the general numbers itself, the protection business has grown to eight percent. What you are also stocking in terms of the expected persistency ratios and the persistency curve across time horizons that is showing improvement.

The solvency ratios are very solid for the company. The value of new business margins are probably expanded to 17.5 percent on the premise of the protection business actually moving higher. The ULIPs and the contribution in terms of the retail annualised premium equivalents is still higher and ULIP still accounts for 80 percent odd. I think the increase in product mix and the tilt towards high margin businesses supports the value of new business (VNB) margins actually expanding further.

So, again the base case is here that the annualised premium equivalent earnings growth related stories still continues and the annual premium equivalent (APEs) should grow at a very decent clip going forward as well. From a valuation perspective also, it trades around 2.5 times on an earnings before interest, taxes, depreciation, and amortisation (EBITDA) value basis. So, the growth prospects is probably there for the company over the medium to long term. So, the suggestion to the investor is to clearly hold on to the stock.

Nagesh Boorugu writes to us from Hyderabad. He holds 200 shares of Kotak Mahindra Bank at Rs 1,200 since eight months. He is a long-term investor and wants to know whether to hold or sell?

I would say that Kotak Mahindra Bank is on a correction mode and it is only a short-term correction. I would say that until it falls below, say the support range between Rs 1,290 and Rs 1,267. I don’t think there would be any cause for worry. On the contrary, Kotak Mahindra Bank can easily bounce back once it takes out Rs 1,360. Again on a rebound, it would regain the old momentum that it had. So, I personally would vote for retaining Kotak Mahindra Bank even though HDFC Bank maybe better on certain parameters, but Kotak Mahindra Bank is also very good so if I were in his shoes I would definitely retain.

Sneha Sinha writes to us from Punjab. She holds 173 shares of Asian Paints at Rs 510 since two years and five months. She is a long-term investor and wants to know whether to hold or sell?

The power of compounding is obviously working for the investor. I was hearing Mangalam out yesterday post the numbers on your channel itself and the phenomenal growth that Asian Paints has reflected in volume terms, which has again got reflected in terms of the leverage that they have taken because of the price hikes on their EBITDA margins at 19.9 percent, I think that probably stood out for the quarter.

The management has reiterated that push cost inflation might take a hit in terms of EBITDA margins, but the ability to pass this on in terms of discretionary demand expected to comeback very strongly in the second half and being a market leader again within the paint industry and the decorative space itself, I think that should hold up the earnings for the company.

The cut in Goods and Services Tax (GST) rates from 28 percent to 18 percent in the unorganised sector, which is almost 25-30 percent of the industry as a whole I think a part of the business should gradually start shifting towards the larger organised players like Asian Paints. The expansion again into tier-II and tier III cities and the re-painting demand expected to comeback very strongly because of Minimum Support Price (MSP) hikes and the discretionary demand patterns remaining strong should augur well for a 10-12 percent topline growth of a 14-15 percent earnings growth. So, clearly hold on to the stock.

Manoj Nimavat holds 18 shares of Bombay Stock Exchange (BSE) at Rs 808 a piece for the last one year. He is a long-term investor and wants to know whether to hold or sell?

After considerable period of downswing, it's now consolidating and I would suggest that hardly any stock available in that space. Long-term prospects continue to remain good especially this consolidation that is currently on, the stock should be held with a stop loss below Rs 750 on closing price basis and going forward, I expect there could be good rise, at least 10-15 percent over a period of next one year or so is likely because of the consolidation.

Deven Shah holds 50 shares of Delta Corp at Rs 170 per share? He wants to know the prospects of the company because the stock has corrected substantially.

The numbers had been reasonable for Delta Corp and going ahead, the new gaming policy is something that will define the trend. Going with the earlier norms that had come through, expect to see a bit of a dichotomy; the offshore and onsite casinos and even if one assumes with the increase in the licence fees, a lot of the other operators who are operating probably onshore are going to feel the brunt. Again, Delta will feel the brunt for its onshore operations as well, but the footfalls for its biggest operating unit that is Deltin Royale should continue and that itself will led to strong earnings growth and visibility. The second element in terms of the results profile itself, both the casino gaming business and the online gaming business have done well and even if you assume EBITDA margins to contract a bit, 36-37 percent odd, EPS to get reported around Rs 9, there is still reasonable scope in opinion even from the current levels. So the investor can clearly hold on to the stock as well.

Gunjan Jain writes to us from Amravati. She holds 153 shares of Hexaware at Rs 230 since one year and five months. She is a long-term investor and wants to know whether to hold or sell?

It depends on the view point that investor holds. So if't is a longish view, I think she can hold on. I think the kind of commentary that the management probably gave out both in terms of the dollar guidance at 12-13 percent and few of their business verticals, which includes manufacturing, consumption, and insurance accounting for 26 percent holding out quite well. The only sore point probably was flattish EBITDA margins that the company reported and particular key client’s specific issues. So that is what the street is probably little bit plagued about, because the valuations of Hexaware even at the current juncture are no way cheap compared to a lot of its peers.

So, again I think a large element of the view point probably remains, but an alternate stock that can also suggest to the investor is KEI Industries. Very strong order book at Rs 2,570 crore. Engineering, procurement, and construction (EPC) stand at Rs 1,470 crore odd. What we probably see in terms of the EPC execution happening at a fast clip, the extra high bolt segment also contributing significantly better would lead to EBITDA margin expansion of 10.5-11 percent odd. You are probably talking about a 16-17 percent topline growth and 19-20 percent bottom-line growth and again I think the return on earnings (ROEs) and earnings per share probably expanding in double digits over the next two years. Alternate choice for the investor is KEI Industries on the declines in a standard way.

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First Published:Jul 25, 2018 5:01 PM IST