After almost 10 percent rally, it seems that market is getting stable before election outcome. However, in some stocks, it is possible to see some great action, on the back of positive inflows from FIIs. In previous month i.e march, FIIs had invested more than Rs 32,000 crore in Market. But for April, this number could be lower. However, the positive thing is that Inflows in market are still more than Outflows despite of election month!
In this movement of market, i think few stocks are still there which have not yet participated in any rally from long time despite of good financials and future scope. Given below is a brief discussion and analysis of such two stocks.
South Indian Bank
South Indian Bank (the Bank) provides retail and corporate banking, Para banking activities, such as debit card, third-party product distribution, in addition to Treasury and Foreign Exchange Business. The Bank’s segments include Treasury, Corporate/Wholesale Banking, Retail banking and Other Banking Operations.
Advantages if you buy at current levels
- Among Private Sector Banks, this stock is still trading at very attractive valuations.
- After Kerala Flood, we had seen a significant impact on the performance of bank. But after few months, it was able to surpass that bad situation and show a strong bounce back.
- Stock has been in a good momentum from last few days. However, this momentum is nothing against its potential.
I remember, before Kerala Flood in mid 2018, stock was available for purchasing around Rs 23-24, which was a good price. However, when company reported its weak financial performance after Kerala Flood, stock had fell to levels of Rs 13-14. But within a few months, financial performance of bank had got improved. Despite of that, stock is still trading below Rs 20! Additionally, many other private banks have witness a strong rally in past few weeks/months which is something like motivating thing for this stock also. Therefore, I believe this particular stock has enough potential to give you atleast 20-30 percent return in next 1-2 months. Target of Rs 20 is easily achievable in this stock without any difficultly. Thus, South Indian Bank stock could be proved as a good buy at current levels.
Eros International Media Limited is engaged in the business of film production, exploitation and distribution. The Company’s principal products/services include Media and Entertainment Industry.
Advantages if you buy at current levels
- The very first advantage is that promoters in February 2019 had released some pledge shares which accounts nearly 5-6 percent of total outstanding shares of company. In this regard, stock has didn’t give any such rally which would have last for long time.
- Company has released a kind of web serious on the life of Prime Minister Narendra Modi on its online platform, Eros Now. This may give a good attention level to the company, whether this series would got success or not.
- Valuations of company looks comfortable and attractive at current levels.
Disadvantages if you buy at current levels
- Around 30-31 percent of promoter holding is still under pledge. However, I didn’t find any serious corporate governance issue in company ( if you know about any such issue, please let me know through comment box ).
Although, if you buy this stock at current levels, you will have both advantages and disadvantages. If you see, in recent time, market has given strong punishment to those shares, where promoter pledge was at alarming levels. Maybe, any rise of serious issue in Eros International company may also lead this stock towards a strong punishment. However, because of one and two big risk, it is also not right to give away good opportunities.
At current levels, market capital of company is just Rs 750 crore against its quarterly revenue of Rs 250-300 crore. Additionally, it is generating a significant profit level which has been consistent above Rs 50 crore from last few quarters. This really looks quite attractive at current valuations. However, they have not distributed any dividend out of this profit, which maybe looked very strange.
Thus, it would not be wrong to say that Eros stock has its own few reasons for why it is trading at current levels. But at the same time, one should not forget that this stock was trading around Rs 200 in 2018. Additionally, there are few other stocks also in market which are quoting around good levels despite of Pledged Share Holding concern. Beside of Pledge share and dividend concern, it is definitely a good option for buy.
Overall, i believe this stock has enough potential to test levels of Rs95-100 in next one month on the back of Good valuations and release of online series on PM Narendra Modi.
But remember, liquidity condition of Eros Stock is not so great. Therefore, it is possible to see little higher volatility in stock.
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