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  • MODERATOR:

    Hello, everyone and welcome to the chat with Mayuresh Joshi, Fund Manager (PMS), Angel Broking



  • A

    ABHINAV

    Is it a good time to buy mid-cap stocks? Can you suggest a few? I can invest up to Rs 1 lakh

    MAYURESH JOSHI

    Hi Abhinav, One must follow a bottom up approach in identifying mid cap stocks and the ability of these companies to withstand business cycle gyrations and show steady earnings momentum. What we like from the mid cap space at this point are companies like Bajaj electricals, MBL Infrastructure, Hindustan Media Ventures, MT Educare, LIC Housing finance. All these compnaies can reflect steady earnings momentum and as the economy revovers over a period of time, they shall witness margin expnasion aided by the fact that valuations are not looking expensive/steep.


  • R

    RACHIT

    HI Mayuresh, I am currently holding the shares of Dishman Pharma, bought the shares at the price of Rs 200 per share. Please let me know the future of the stock. Thanks, Rachit

    MAYURESH JOSHI

    Hi Rachit.... Dishman's main business vertical is the CRAMS segment is expected to stabilize as Carbogen Amcis has a decent order book and its Vitamin D is expected to scale up. Also EBIDTA margins are higher for these business vertical. The management is also not looking at any meaningful Capex over the next 2 years and focussed on improving the profitability of the business. So capex is expected to be around 30-50 crs and its intent of sweating its assets and restructuring the business, which will lead to improvement in profitability over the medium term. We expect the ROCE to improve to 13.1% in FY2017E from 7.7% in FY2012.We remain bullish on the stock. Please hold.


  • S

    SUJAL SHAH

    Please give me 5 mid-cap stock stock ideas that have strong fundamentals

    MAYURESH JOSHI

    Hi Sujal, Some of the mid cap stocks that we are liking at this juncture are: Bajaj Electricals: Turnaround play on improving business prospects in the E&P vertical and return to profitability in FY 17 from losses incurred in FY15 MBL infra: Strong play on the EPC side with special focus on the roads and highways segment MT educare: Strong play in Mumbai education market, expanding region coverage and showing stability in earnings. Hindustan Media Ventures: Strong advertising and subscription growth in Hindi reading belts, strong Balance sheet Surya Roshni: Strong play on the Lighting division though steel business is causing some compression on consolidated numbers. Recovery expected in next 2 years. LIC housing Finance: Strong loan grwoth, asset quality stable, cost of funds coming down and valuations attractive.


  • J

    JAI PRAKASH

    What should one to do with PTC, Delta Corporation and Adani Power?

    MAYURESH JOSHI

    Hi Jai Prakash, Power stocks like PTC have faced issues in the past due to Grid constraints resulting in the spreads in their trading business dwindling for contractual issues faced by the company. Albeit, 4.8GW of capacity is expected to be added to their portfolio over the next year or so and PPA's and PSA;s are in place for a majority of its capacity. Its tolling business is also seen under pressure while one must apply the holding discount to its subsidiary PTC financial services. So recovery would hinge on sate of DISCOM financial health improving and Grid constraints coming off. Hold if one has a view of more than 2 years to give time for earnings recovery. Adani power has a highly leveraged balance sheet which makes cash flows not sustainable while Delta in my opinion is more of a trading play. I would rather prefer the housing finance companies like LIC housing which would see benefits from a falling interest rate scenario and asset quality holding up.


  • V

    VIJAYENDRA VEDIC

    When fundamental and technical aspect are the same, why does a stock move 7% to 10% and other only 1% to 2%?

    MAYURESH JOSHI

    Hi Vijayendra, Fundamentals are more a play on how the Balance sheet is coping up for the company and how the earnings are shaping up. Consistency in these two elements taking into cognizance macro conditions and the micro environment exhibit the ability of the business to withstand tough economic cycles. Technical s are more or less based on the time and price chart patters and a tool from a short to medium term perspective. So if fundamentals are strong the stock delivers returns over a longer time horizon while technical are relying on volumes of the underlying stock, news associated with certain stocks/sectors etc.


  • R

    RUDRAKSHA

    Sir, I have 500 shares of Syncom Formulations bought at Rs 12. What should I do now?

    MAYURESH JOSHI

    Hi Rudraksha, I am not covering Syncom Forumations. However we remain optimistic on Dishman Pharma from the mid cap pharma space and Sun Pharma from the top tier pharma names. FY2016 US sales are expected to continue to be impacted for Ranbaxy integration issues as well as remedial issues related to its plants. However a revival is expected only in FY2017. Thus, we expect a 2.2% growth in FY2016 and around 16.0% yoy growth in FY2017, in the US. We expect the domestic formulation business to post a CAGR of 15.4% over FY2015-17E, contributing 27% to the overall formulation sales of the company in FY2017. Sun Pharma has one of the strongest balance sheets in the sector with cash of 10,000cr. The same can continue to support the Management in inorganic growth and in scouting for acquisitions, especially in the US and in emerging markets. Can look at the stock on declines.


  • G

    GIRISH VAIDYA

    I am stuck in delivery position (longs) on Kaveri Seeds from 800 levels. The way its falling, is there any merit in holding these longs, or shall I come out in loss? Have a time frame of 6 months. Thanks

    MAYURESH JOSHI

    Hi Girish, I unfortunately do not cover Kaveri seeds.


  • A

    AKSHAY

    What should one do to make the market as a major part of one's income, say with an investment of Rs 5,000?

    MAYURESH JOSHI

    Hi Akshay, One needs to consistently/systematically keep on investing in the markets and have a horizon of more than 3-5 years. The return on investments over a longer time period shall have a compounding effect on how your earnings shall grow. If you are a new investor the best way is to opt for SIP instruments in Mutual funds which allows you entry points across different time horizons and reduces your impact cots and risks associated with sharp market volatility.


  • M

    MILIND BHALIWADE

    What are your views on Bharti Airtel, Tata Motors and Nifty Cash?

    MAYURESH JOSHI

    Hi Milind, Numbers were on expected lines. However cash flows might remain subdued primarily due to the spectrum payments and african operations resulting in return ratios remaining muted. Also the reliance jio launch is keenly awaited, Data revenues have seen good traction but the debt on its books still eats into the bottom line because of the interest serving component. Largely neutral at this point of time. Tata Motors has seen slowdown in china affecting its volume growth substantially and the management also sees FY16 to be muted. However its new product launches, its Chinese JV operations, recover in India business and valuations support its long term story. We remain positive on the stock but the horizon has to at least 15-18 months to let volume recovery play on the JLR story.


  • V

    VINEET

    What is your view on state-owned banks following the government's revival plan 'Indradhanush' and appointment of private banking personnel to head some of the state-owned banks? With some banks already rallying post the news, which would be your top picks for a 3-year holding period?

    MAYURESH JOSHI

    Hi Vineet, The inherent dynamics do not change for the PSU banking space. Asset quality concerns from stressed sectors like Iron/steel, Real estate, Sugar, Infrastructure still persist putting pressure on asset quality. The recapitalization move is very positive but for return ratios to improve shall take time. Yes valuations are very attractive for the whole lot but then one must be selective. We like State Bank of India from the PSU Banking lot due to its high CASA and fee income, which has supported its core profitability in challenging times. Its strong capital adequacy also provides comfort. In our view, its current valuation of 1.1x FY2017E ABV, after adjusting for subsidiaries, factors in the positives for the bank.


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