Day 11 – More on Stocks – Part 2- #IndiaFightsCorona #Lockdown21

Disclaimer: The views here are PURELY personal. But, they do have some weight because I have completed all the required studies certifications to become a SEBI registered Investment Advisor. Unfortunately, I could not get one required NoC. I still don’t have it. So SEBI has put my application on hold for 7 months. However, I still continue to study stock markets with the same rigor. Please read it but make sure you do understand the logic behind my interests in these stocks. Besides, if you make a decision for your investment based on this input, you still are ON YOUR OWN. In case you lose money, you can curse me but that you may do anyway to many other people anyway. So if I am added to the list, no sweat on that 🙂

If you wish to read part 1 of this blog series, then please go to this link. (Remember, disclaimer remains the same irrespective of the sequence of your reading the blog).

The current state of mid-caps and small-caps is extremely precarious.

See the chart for NIFTY MID 100 index below:

And chart for the NIFTY SMALLCAP  100 Index below:

Quite natural that such a beating opens a large opportunity for value picking. Remember that mid and small caps are more exposed to risks. So volume traded becomes a big consideration point in their selection.

Below are my mid-cap thoughts. Note that these are not recommendations of any kind but are ‘thoughts’.

1. IRCTC – There is hardly anyone in the country who is not familiar with their website.
   • Indian Railway Catering and Tourism Corporation is the primary and the only provider of following services to the Indian Railways –
     • Primary web portal for e-Ticketing for all of India Railways
     • Holiday planning
     • Station catering services etc
   • In Oct 2019, the IPO was awarded at Rs. 340/- per share.
   • Current price is Rs. 1002/-
   • Peak price before the meltdown was Rs. 2000/-. So market is ready to accept this valuation for the stock.
   • The train and so the reservation services are adversely affected due to the lock down. And the rail traffic will not be same for at least 3 more months. Given that the stock will be range bound for some time.
   • However, as it has a brute majority in the ticketing space, it should achieve its glory of March 2020 again.
   • In addition, with the emphasis on luxury segment by the Indian Railways, IRCTC would gain as the segment expands.
   • A great value play if you are patient enough.
2. Finolex Cables – A market leader in wires and cables, Finolex has been in the wiring business for a very long time. The company had a rough 2018 due to the family feud between cousins over the ownership of business under the Finolex Industries umbrella. With that in the past, the company is doing the following –
   • It has forayed into the consumer electrical goods space with water heater, fans, switches, LED lighting etc.
   • A similar story was started by Havells few years ago giving multi-fold return
   • Given the current regime’s push on affordable housing and the long pending turn around in the real estate sector, the company is going to gain with expanded market for electrical goods and parts.
   • The consumer sentiment will take some time to pick up from here so one needs to be patient if they buy this thought.
3. Federal Bank – A bank with a very old heritage, Federal Bank, has seen completely organic and conservative growth over the years. Here are some interesting things about this stock –
   • An extremely strong balance sheet with all the perimeters marked by RBI adhered to in the most convincing way.
   • One of the lowest NPA percentage in the banking industry. With anymore Yes Bank type episodes (RBL Bank and IndusInd Bank not hinting at you guys), Federal Bank is bound to gain for the consolidating market.
   • Current market sentiment puts it at a very interesting entry point.

AS promised, I did my bit of sharing my thoughts. Whether to align or not is your choice.

Dont forget the DISCLAIMER!