PSU Stocks That Defied the Trend amid Demonetization Demonetization seems to have little effect on some public sector companies whose shares have been buoyant even in weak markets. Power Finance Corporation, Engineers India, MRPL, Nalco, Mahanagar Gas, HPCL and Oil India have all done well in ambiguous times. Shares of these PSUs have hit record levels after the cash crunch, and sustained to trade close to their highs, outperforming the overall benchmark Index Nifty.
Energy- Oil and Gas Sector:
Oil India Oil India, one of the foremost upstream companies, is likely to benefit from the rising crude oil prices. The government has indicated zero oil subsidies for FY17 for the sector as compared with Rs 5,500 crore in FY15 and Rs 252 crore in FY16. The stock is trading at 9 times expected FY17 earnings. Yesterday, Oil India share price closed at Rs. 419.35, today, it opened with a jump at Rs. 426.50. The stock touched its morning intraday high of Rs. 428.70, up by 2.22%. Oil India is the top 500 performing stock for the quarter identified by Dynamic Levels.
MRPL Singapore gross refining margins, the benchmark margins, have firmed up and within this refining margins from fuel oil have increased sharply. Given that MRPL has considerable fuel oil producing capacities and its margins are in the US dollar, a depreciating rupee will also aid. This can enhance the estimated EPS by up to 10%. The stock is trading at 5.5 times FY17E earnings. MRPL is also identified as the top 500 performing stock by Dynamic Levels for the quarter. Today, MRPL share price traded at the morning intraday high of Rs.
99.75 while its 52 week high is seen close enough to that price at Rs. 104.50 that it traded on 28th November 2016.
Mahanagar Gas The company is benefitting from the quick conversion of vehicles into CNG. This will fetch volumes growth visibility in medium term for the company. With earning growth expected to be around 30% in FY17, it is trading at 19 times. Today Mahanagar Gas share price opened at Rs. 771 against its previous close of Rs. 769.15. The stock traded at the morning intraday high of Rs. 773.80, up by almost 1%. The stockâ€™s 52 week high stands at Rs. 828 that it traded at 29th November 2016. It is a top 500 recommendation by Dynamic Levels.
HPCL Like MRPL, HPCL too, is expected to benefit from the higher gross refining margins. Allowing usage of old high-denomination notes at petrol pumps will help additionally. A higher crude oil price means higher inventory gains. The stock is trading at 9 times expected FY17 earnings. HPCL share price traded at its new lifetime high on 29th November 2016.
Financial Services Sector:
Engineers India The company is anticipated to be a key beneficiary of the refinery up-gradation plan of Rs 25,000-30,000 crore triggered by the new emission norms. The company has directed for an order inflow of Rs 2,500-3,000 crore for the financial year 2017 and has already got orders worth Rs 2,253 crore in the first half of the financial year. Yesterday, although Engineers India share price closed with a marginal decline, it had traded at the intraday high of Rs. 295.50, very close to its 52 week high of Rs. 297.90. While today, in the first fifteen minutes of the trade, the stock traded at its new 52 week high of Rs. 300.25. Engineers India is the top 500 recommendations as well.
PFC Slippages are likely to come down as state electricity boards, who PFC lends money to, are expected to have a bonus gain from demonetization. According to reports, retail users have used their old notes to pay their old as well as current dues thus, leaving more money with the electricity boards. The stock is trading at attractive valuation of 1x book value and close to 6% dividend yield. Yesterday, PFC share price traded at its new 52 week high of Rs. 135.60 surging approximately 3%. Even today, the stock traded at a new 52 week high of Rs. 135.70. PFC is the top 500 performing stock identified by Dynamic Levels website.
Metals and Mining Sector:
NALCO One of the cheapest producers of Alumina is gaining from the rising alumina prices. Since most of its sales are in the export markets, a weak rupee will improve earnings. NALCO is a Multibagger from Dynamic Levels. Today, NALCO share price opened at Rs. 57.30 and traded at the intraday high of Rs. 57.65 while its 52 week high value stands at Rs. 58.90. A push of approximately 2 points and the stock will create a new 52 week high.
The stocks from the Energy oil and gas sector have performed well and some from financial sector. Metals and Mining sector did well in yesterdayâ€™s trade but NALCO outshined in the sector. These stocks have huge potential and can be considered for enriching the portfolios.
Disclaimer The investment advice or guidance provided by way of recommendations, reports or other ways are solely the personal views of the research team. Users are advised to use the data for the purpose of information and rely on their own judgment while making investment decision. Dynamic Equities Pvt. Ltd - SEBI Investment Advisory Reg. No.: INA300002022
Disclosure Dynamic Equities Pvt. Ltd. is a member of NSE, BSE, MCX SX and a DP with NSDL & CDSL. It is also engaged in Investment Advisory Services and Portfolio Management Services. Dynamic Commodities Pvt. Ltd., associate company, is a member of MCX & NCDEX. We declare that our activities were neither suspended nor we have defaulted with any stock exchange authority with whom we are registered. SEBI, Exchanges and Depositories have conducted the routine inspection and based on their observations have issued advise letters or levied minor penalty on for certain operational deviations. Answers to the Best of our knowledge and belief of Dynamic/ its Associates/ Research Analyst: DYNAMIC/its Associates/ Research Analyst/ his Relative:
Do not have any financial interest / any actual/beneficial ownership in the subject company. Do not have any other material conflict of interest at the time of publication of the research report Have not received any compensation from the subject company in the past twelve months Have not managed or co-managed public offering of securities for the subject company. Have not received any compensation for brokerage services or any products / services or any compensation or other benefits from the subject company, nor engaged in market making activity for the subject company Have not served as an officer, director or employee of the subject company
Article Written by Tanaya Nath