Sandip Sabharwal on safe sparklers, high-risk rockets and value bombs for this Dhanteras
Sandip Sabharwal, asksandipsabharwal.com, says while there is nothing safe in the market, IDFC First Bank stocks can be the relatively safe sparklers. For those willing to take higher risks, Ahluwalia Contracts can be the high-risk rockets while InterGlobe Aviation or IndiGo can be the perfect value bomb.
This Dhanteras, which safe sparkler or safe bets should one look at?
Sandip Sabharwal: Now, there is nothing safe in the stock market as such. It is all about relative safeness. I think IDFC First Bank is pretty well placed at the current prices. The results which came out over the weekend reflected that there is resilience in the business model. The core business is doing well. When you look at every bank, the key to look at is the asset quality of the bank and the deposit growth quality of the deposit and then the credit growth and the reported profitability. So, in all these parameters, it is doing very well. Its net NPAs are very similar to that of ICICI Bank or HDFC Bank.
Provision coverage ratio is very high and the stocks have fallen nearly 35-40% from the top over the last few months. So, at this price, there is reasonable comfort. From here, I would think that given the valuations of the company, the probability is that there could be possibly a 10% downside or maybe a 10-15% downside if the market really sells off and a 50- 60% upside even if the stock goes back to the same levels that it was at the beginning, like at some point during the current year of Rs 100.
Since you said that nothing is safe in
