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

In June 27 edition of Your Stocks, Mayuresh Joshi of Angel Broking and Sandeep Wagle of powermywealth.com answer your queries on investments in the stock market

Q: Prasun Banerjee writes to us from Kolkata. He wants to invest Rs 1 lakh for long term and wants advice on a few stocks.

Wagle: I would talk of few stocks. HDFC, HDFC Bank, these are stocks which are outperforming even in the current markets. May be a little bit of correction is possible in Jubilant Foodworks, that is still looking good, very comfortable with buying this stock. Hindustan Unilever Ltd (HUL) on a correction is a stock, I would talk of. I do not see the stocks correcting more than 5-7 percent. From those levels, you can have a stop loss of 10 percent and I would talk of a 15-20 percent upside over the next 8-12 months.

Joshi: Looking at market conditions, I will probably be putting it in a very staggered way over the next few weeks. A large element in terms of sticking with quality and high pedigree names is something that I would suggest any investor with a long term perspective. I think out of the largecap names, Maruti for example, in our opinion should stand out both in terms of the utilisations at their Gujarat plant wrapping up and again for the cost optimisation programs continuing. The leverage should play on their balance sheet in terms of earnings growth.

I totally concur with Sandeep, I think HDFC Bank also probably remains one of the high pedigree stocks in terms of earnings growth, our own expectation is 20-22 percent of earnings growth over the next few quarters. Within the broader universe again, in the non-banking financial company (NBFC) space, within housing finance companies, Dewan Housing Finance (DHFL) is something that we continue to like both in terms of the advances in earnings growth in excess of 30 percent is what we peg. Very comfortable in terms of capital adequacy. The net interest margin (NIM) might soften a little bit, because of the yield movement that you have seen, but the overall valuations look very weak.

Q. JP Gupta writes to us from Delhi. He holds 275 shares of Yes Bank at Rs 331 since four years. He is a long-term investor and wants to know whether to hold or sell?

Joshi: He is in the money and then the second time again in terms of his horizon, he is comfortably placed. In that respect again, the cost to income ratio or the fundamental perspective for Yes Bank comfortably perched at 42.8 percent. In terms of the RBI divergence itself, out of Rs 6,350 crore, the outstanding restructure just stands at around Rs 2,650 crore. So the net stressed asset around 1.73 percent of the overall advance, again in terms of credit cost is very manageable at this point of time. The large element in terms of expectation of their advances growth to be in excess 30-35 percent, earnings growth to support that in excess of 30-35 percent holds the stock in good state. So, return on assets (ROA) is at 1.7, return on equity (ROE) is at 17.7 and there is no reason to complain why Yes Bank cannot continue with its stupendous growth. So, since he has a long horizon, a clear hold from my side.

Q: Lakshmi N writes to us from Tamil Nadu with a query. She has investments in Rain Industries and holds 55 shares at Rs 353 since two months. She is a short term investor and wants to know to hold or sell?

Wagle: Certainly, not averaging at this levels, booking losses whether now or on a bounce Rs 230-235 can’t say whether that will come, so Rs 170 is a safe stop loss. In case, Rs 170 is broken the stock, can go down to Rs 140 also. So, that call has to be taken by the investor.

Q: Saloni Gupta writes to us from Delhi. She holds 57 shares of Bharat Dynamics at Rs 418 since IPO. She is a long-term investor and wants to know whether to hold or sell?

Joshi: I don’t track Bharat Dynamics, but alternate stock that I can suggest is Aditya Birla Capital. Again, I think the fall has been stupendous in this stock but the entire theme in terms of financialisation of savings is something that will play out beautifully for this stock over the longer term. The NBFCs loan growth is stupendous, the net interest margin (NIMs) are probably around that 4 percent mark. It might come out for tad bit, but I think the growth looks very strong. The assets under management (AUM) growth in terms of equity assets under management are extremely strong. The NBFC arm and the housing finance arm are doing exceedingly well. The life insurance arm has broken positive of the VNB in the margin front. So, on SOTP basis looks interesting.

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