Talking stock: Accumulate PTC India and Lupin; hold Federal Bank

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Recent depreciation of rupee and possibility of all its plants getting back US FDA approvals ultimately augur well for Lupin stock.

MD, Equinomics Research & Advisory

I hold 1,000 shares of PTC India financial at Rs 34. Should I average it now? —SACHIN MEHTA
You may average PTC India Financial at current price as it trades at over 30 per cent discount to its adjusted book value and its net NPA stands at a manageable level of 4.16 per cent.

I have bought 1,200 shares of GATI at around Rs 138 per share. I want to hold for medium term. Should I average the price at these levels?—SANDEEP SHAH

It is quite possible for the stock of GATI to return to your cost price within 12 to 18 months, considering the longterm benefits of GST and anticipated improvement in India’s GDP growth going forward. Hence, to reduce your average cost, you may accumulate it after its March 2018 quarter results as recent oil price might have impacted its margin in this quarter.

I have 800 shares of LupinNSE 4.95 % at different prices : 200 at Rs 1,450, 200 at Rs 1,250, 200 at Rs 1,050 and 200 at Rs 875. Should I sell it or hold it?— ANIMESH CHANDRA

Yes, you may average it by accumulating it at current prices provided the share of this stock in your overall equity portfolio is not more than 5 per cent to 10 per cent depending upon your risk profile. In my view, a large number of Lupin’s products are getting US regulatory approval. Recent depreciation of rupee and possibility of all its plants getting back US FDA approvals ultimately augur well for the stock.

I have 1,750 shares of BLS international at an average rate of Rs 278. What should I doRs Also, I have 2,100 shares of South Indian Bank at an average rate of Rs 33.03 and 2,075 share of Federal BankNSE 2.73 % at an average price of Rs 94. Should I book the loss or hold? —MUSTHAFA K

You may hold BLS International with a target price of around Rs 210 as valuation of this growing service–oriented company is only around 15 for the current year and also its balance sheet is quite strong in terms of leveraging and working capital management. South Indian Bank and Federal Bank, the old private sectors banks in the country which successfully survived over 8 decades to a century, are attractively valued at current prices. Their Net NPA levels are too low as compared to the PSU banks and they maintain impressive credit growth as well. Hence, you may hold them.

I have 500 shares of Dhanalakshmi Bank at Rs 41 and 1,000 of South Indian Bank at Rs 29. What should I do? —RAJAN IYER

You may certainly add shares of South Indian Bank to reduce your average cost as it has got a business size of over Rs 1 lakh crore, maintains a strong double-digit credit growth and also trades at an attractive valuation of 1.2 times adjusted book value. Tactically, yes, you may add Dhanlaxmi Bank. Though now it is also cheaply valued at 1.2x adjusted book value and has cleaned the balance sheet, the major worry is that credit base is too small around Rs 6,100 crore, which de-grew by 5 per cent yoy in FY2018.