Mustafa Nadeem

CEO, Epic Re­search

Dalal Street Investment Journal - - SPECIAL REPORT -

There is still long un­fold­ing that is go­ing to hap­pen in fer­tiliser stocks

Are fer­tiliser stocks over­val­ued?

Yes, since there has been re­duc­tion in GST rates on fer­til­izer stocks from 12% to 5%, huge un­wind­ing is seen in price in terms of valu­a­tions. Most of them are trad­ing near or above their all-time highs, clearly show­ing the huge buy­ing in­ter­est. Mostly stocks have given a bullish rally since then, though trad­ing near pre­vi­ous all-time highs can trig­ger some kind of ma­jor cor­rec­tion. As far as valu­a­tions are con­cerned, we are al­ready see­ing a lot of liq­uid­ity com­ing into the mar­ket, leav­ing no sec­tor un­touched in terms of un­der­val­u­a­tion and that is what a bullish mar­ket has. So, at this point, any jus­ti­fied cor­rec­tion of 5-10% in the short term can be seen, while there is still a long un­fold­ing that is go­ing to hap­pen.

What is your out­look on fer­tiliser stocks?

We be­lieve the trend to con­tinue in the near term, with prices trad­ing near all-time highs. Few of the stocks have al­ready breached all-time highs and have given break­outs like Cham­bal Fer­til­izer and Gu­jarat State Fer­til­iz­ers, along with Coro­man­dal In­ter­na­tional as well. Since the break­out has hap­pened after a pro­longed pe­riod of con­sol­i­da­tion, we be­lieve any cor­rec­tion over the short term in the stocks will be an op­por­tu­nity to add to port­fo­lio for a longer pe­riod of time. One can look at Cham­bal Fer­til­izer where the pre­vi­ous top of around ₹125-120 will be act­ing as a fresh base for po­si­tional traders with up­side pos­si­bil­ity of 20-30%, while Coro­man­dal In­ter­na­tional is an out­per­former with much higher pos­si­bil­ity to reach ₹520 level.

Newspapers in English

Newspapers from India

© PressReader. All rights reserved.