What should I do with GIC shares

G Chokkalingam
Founder, Equinomics Research & Advisory

I have invested in GIC at an average share price of Rs 840, but now it’s trading below Rs 800. What should I doRs — GAUTAM BINDRA

The insurance business is a consistently growing business, which would also benefit a reinsurance company like GIC. Moreover, GIC Re trades at a decent valuation of around 3.5x current year book value. Hence, you are most likely to end up with significant profits in GIC in the long term and therefore, you may add more shares at current price to reduce your average cost.

I want to buy PTC India. Should I buy and hold it for the next 8-12 monthsRs — PRADEEP DHOUNDIYAL

You may. PTC India is trading at marginally lower than the current book value and may give 15 per cent to 20 per cent return in the 12-month period in a normal market condition.

I have 1,500 shares of IFCI, 200 shares of NationalPeroxide, and 25 of Vardhman Holding. Kindly advise what to do with them. — ABHILASHA P

IFCI is making huge losses and also sitting on record high level of bad assets. Hence, sell the stock if it recovers 5 per cent to 10 per cent from the current levels. National Peroxide stock has already moved up 3-fold and trades at over 16x current year’s expected earnings. Generally. chemicals companies do not have stability in robust earning growth in the long term. Therefore, sell it if the stock recovers another 5 per cent to 10 per cent from the current levels. Vardhman Holding is primarily a holding company of Vardhman Textiles which alone account for more than 90 per cent of total investment value at current market price. At present, Vardhman Holding trades at about 39 per cent discount to total market value of investments adjusted for cash equivalents as on March 31, 2017. This discount is significantly higher than the average holding discount of around 45 per cent. Moreover, the management of this holding company doesn’t reward the shareholders adequately - despite posting an EPS of Rs 569, it paid a dividend of mere Rs 5 per share (payout of less than 1 per cent) for FY2017. If this illiquid stock possibly rallies back near Rs 6,000, then sell the stock.

I hold 60 shares of GSPL at Rs 71 per share. How much steam is left in this counterRs — SUBRATA KUMAR MITRA

GSPL trades at decent valuation of around 14x one-year forward earnings. Sell the stock around Rs 235 which would be a fair price.

In the first half of 2017, I bought Greaves Cotton (2,000 shares at Rs 159.56), Kopran (3,525 shares at Rs 92.83), and Subex (11,000 shares at Rs 12.46) for a horizon of 2-3 years. What should I do with themRs — JAYANT SHAH

Greaves Cotton is unable to post any significant growth in revenues in the last five years, and hence, its PE of 15 for FY19 expected earning is quite fair. Sell the stock if it recovers to around Rs 145 level. Kopran trades at quite expensive valuation of around 24 PE current year earnings – so sell the stock on market recovery. In my view, Subex is not a suitable stock for investors, it may be a stock for speculative traders. Promoters’ holding is mere 0.17 per cent. Of the total noncurrent asset (NCA) of Rs 773 crore, the fixed assets towards property, plant and equipment is just Rs 7.73 crore, the balance of Rs 660 crore (ie 93 per cent of total NCA) was spent over “Goodwil on Consolidation & other intangible assets”. With these features, the stock trades at more than 50 PE on current year’s expectations – the costliest stock in the Indian IT space. Sell if it sees any possible speculative rally.

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