Ask our experts – July 2022

I am a trader, already bought Manappuram for Rs. 178. Now it fell to Rs. 90. Kindly share your views on its future.

Management of the company has changed its strategy to focus on profitability over growth and decided to maintain its high gold loan yield irrespective of competitive pricing pressure. This is expected to impact the growth in the near term. The impact of the same was visible in recent quarterly numbers with subdued growth in Gold AUM. This has triggered huge selling in the stock. However, due to the recent correction, we expect decent upside potential in valuation from the current levels.

Can we average positions of LIC, Zomato, ABSL- those trading at very low prices than their IPO issue price? Can we hope LIC equity will be boosted up, or at least is there any possibility for it to return the amount invested?

We believe that LIC is a decent investment opportunity in the short to mediumterm, considering its deep discount to private players, strong market presence, improvement in future profitability due to the changes in surplus distribution norms and strong sector growth outlook. However, due to its declining market share, we have a cautious long-term outlook. The stock is expected to perform well when we have a bounce in the market and positive performance of the insurance sector. Aditya Birla Sunlife (ABSL) AMC, the fourth-largest AMC in India, enjoys a dominant position in fixed-income segment. We have a positive outlook on Mutual Fund industry considering its lower penetration and increased awareness of savings post pandemic. ABSL is attractively placed in comparison to peers and expect valuations to improve over long run. However, as Geojit research team is not covering this stock, we are not in a position to give our recommendations. Zomato’s growth is back supported by strong volumes growth, healthy levels of new customer addition, strong penetration, and reduced costs. We see strong outlook in the company’s future performance. Though poor financial numbers in past had made significant corrections, the recent performance remarks positive signs. Therefore, we remain positive on the stock.

I have bought 13,000 shares of South Indian Bank at the rate of Rs. 22. And the stock is underperforming since a long time. What should I do now and what is the future of this share?

South Indian Bank is currently on a phase of recovery with the new management showcasing continued improvement in major business parameters. Improvement is clearly visible in changing advance mix, improving CASA ratio, lowering NPA levels, etc. However, earnings are expected to remain under pressure in the short to medium term with elevated provisioning and slower advances growth. We expect recovery in the stock in the long run, however, the valuation is expected to remain subdued. Considering the high buying price, current low valuation, and the possible re-rating on the stock, we suggest holding the stock with a long-term view. However, we suggest investing in private banks like HDFC Bank, ICICI Bank, Kotak Bank in the future.

Will you please suggest some of the best sectors and stocks I can invest in for 10-year period?

We recommend: Finance sector: HDFC Bank, ICICI Bank, Kotak Bank, HDFC Life IT sector: Infosys, Tech Mahindra, TCS, Info Edge Pharma sector: Biocon, Zydus Life Science Capital goods sector: L&T, Bharat Electronics Media sector: Zee Ent, PVR Oil & Gas sector: Indraprastha Gas, Reliance Ind Consumption sector: HUL, Dabur, ITC, Jubilant Food, Tata Consumer.

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