Expert Advice: Deal with bank shares cautiously

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The Indian companies have performed better than what was expected by the so-called Economists and Analysts that companies will land in huge losses due to Covid pandemic in the country for the year 2020. Majority of them have ended up by posting 40 to 50% receipts by the end of November 2020 when compared to the previous year.

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However, some other companies’ receipts were hardly 25% to 30% of previous receipts but posted marginal profits. Performance of top fifty companies, listed in Bombay Stock Exchange, selected on Receipts wise for the Half-year ended by September 30, 2020, compared to previous 12 months receipts is as follows:

Being an analyst, I advise to deal with bank shares cautiously as many loans were rephrased for Six months to nine months without payment of interest also, the actual NPA position will be known in March quarter from 01-02-2021 to 31-3-2021 only. The profit posted by banks may incur losses also due to NPA s at year-end.

RE for receipts, PR for profits
FY 2019-20. H1 21
12 months. 6 months

  1. Reliance Industries Ltd
    (FY 2019-20) RE 610,806. 213,519
    PR. 39,354. 22,800
    Though turnover was low for H1 2021, profits were maintained. The share price may not fetch more profits in short term. Try to sell the shares.
  2. Indian Oil Corporation
    RE 488,518. 144,414
    PR. (893). 8252
    Company turnaround from last year losses of 893 crores, though turnover was low in H1 2021. cautious while holding this company share.
  3. ONGC
    RE. 406,388. 149,803
    PR. 10,907. 4,455
    Turnover reduced due to lockdown but profits were maintained proportional to sales in H1 2021.
  4. State Bank of India
    RE. 368,010. 184,725
    PR. 19,767. 10,022
    Both revenue and profit in H1 2021 were proportionate to last year. wait for last quarter results to know actual NPA position and actual profits.
  5. BPCL
    RE. 287,901 88,297
    PR. 3,055. 4,298
    Just like other companies in the Oil & Gas sector, (RIL, ONGC, HPCL etc) though sales nosedived profit margin maintained for H1 of 2021. Hold the share for medium-term 2 or 3 years.
  6. HPCL
    RE. 270,773. 91,533
    PR. 2,638. 5,228
    Comment as applicable to BPCL above at No.5
  7. Tata Motors
    RE. 264,106. 86,763
    PR. ( 12,070) (8752)
    sales nose-dived like other Auto companies but loss increased to Rs.8752 crore in H1 2021. Company may recover after 2 or 3 years. Sell the shares.

8. Rajesh Exports
RE 195,607. 148,205
PR. 1,205. 325
Though sales were excellent in H1 2021 profits nosedived. Company may post loss at any time. Export incentive of 2% was also not maintained.

9. TCS ( Tata Consultancy Services)
RE. 161,541. 70,969
PR. 32,340. 14,483
Both turnover and profits were satisfactory in H1 2021. Retain the share.

10 . ICICI Bank
RE. 149,186. 77,260
PR. 9,566. 8,000
Revenue was good in H1 2021. wait for March quarter for NPA actual position and profitability. Hold the share or Buy new shares.

11. L & T
RE. 148,867. 61,960
PR. 9,549. 5,823
Being construction company, lockdown reduced receipts in H1 2021 but profits were maintained. Good share hold it.

12.HDFC Bank
RE. 147,068. 75,137
PR. 27,253. 14,630
Both receipts and profits were proportional to previous year. Low NPA bank for last three years. Buy fresh shares and hold the shares.

13.Tata Steel
RE. 142,037. 62,086
PR. 1,556. ( 2,851)
company posted loss as steel sales reduced in lockdown. Next year may be better year. Sell the shares.

  1. Hindalco industries
    RE. 119,359. 57,304
    PR. 3,767. (322)
    Loss posted for Rs.322 crore in H1 2021 though sales were good. Company post nominal profits for year end.
  2. NTPC
    RE. 115,721. 57,056
    PR. 11,600. 6,326
    performance was propertional in H1 2021. Good share, but may not increase quickly.
  3. HDFC
    RE. 107,542. 67,253
    PR. 21,434. 8,213
    Though receipts increased in H1 2021 profits were not maintained due to stress in mortgage loans. Average share price growth will be there. wait for march quarter for actual NPAs.
  4. Coal India
    RE. 105,185. 41,510
    PR. 16,714. 5,027
    profit for H1 2021 was low . Lockdown effect felt. Hold the shares for next year.
  5. Mahindra & Mahindra
    RE. 97,559. 41,673
    PR. 127.38
    Compare to other companies in IT performance was poor. Company may post losses for the current year. Sell the shares.

19 . Infosys
RE. 93,594. 49,280
PR. 16,594. 9,078
In IT this company creates benchmark for others. Company will grow further and further in the next 2, 3 years. Excellent share.

20 Bank of Baroda
RE. 91,086. 43,538
PR. 927. 1,092
Receipts reduced for H1 2021, it was not a good sign for a bank. wait till March 2021 for actual NPAs and profit.

  1. Bharti Airtel
    RE. 90,598. 50,518
    PR. (32,183). ( 16,696)
    losses were continuing in H1 2021 also due to AGR dues as per Supreme Court orders. subscribers are increasing is a good sign. next year may post profit.
  2. Vedanta
    RE. 87,207. 38,837
    PR. ( 6,664). 1857
    Sales reduced like other Oil & Gas companies in H1 2021. But posted profits. It is a good share to hold as Balmer project coming up in Rajasthan.

23 Axis Bank
RE. 80,057. 39,908
PR. 1,853. 2,938
Revenue was good in H1 2021. profits zoomed. Wait till March quarter .

24 .Grasim Industry
RE. 79,153. 32,990
PR. 4,425. 1,160
Both sales and profits were not upto the mark in H1 2021.

  1. Maruti Suzuki
    RE. 79,112. 24,834
    PR. 5,676. 1,152
    Lockdown affected the entire automobile industry. Though sales reduced profits were posted. Hold the share

next 25 companies analysis tomorrow.

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