Sunday, March 13, 2016

Letters from the Blog Readers...
I am a regular reader of your blog and you provide very valuable information to the investors.

You analyse the share perfectly. Moreover whenever we seek your advice,you always reply.

I have 10**** shares of Rasoya Protein and I have 50**** shares of GVK Power.

Whether I should hold them or sell. I can hold as long as advised.

Please  reply....

Thanking you,

Ketan Acharya


Dear reader, thanks for your compliments. However, I shall be highly obliged if you share a part of your profit in the shares discussed here or if my suggestions have helped you to eke out some profit. It is because lot of hard work and money has to be spent to get reasonably accurate information--if you all help me in this process, then it would be of great help to me.

Anyway, regarding Rasoya Proteins Ltd, I would ask you to either keep holding or exit between the price ranges Re.0.25-0.30, with no profit no gain or with slight loss, if you are not willing to take further risks. I do not see much hope of share price revival till September, 2016, unless something drastic happens (the chance seems to be very limited). However, if you are a long term investor, then you can keep holding, without further averaging.

Now coming to GVK Power and Infrastructure Ltd (Rs.6.95), I would like to say that since I do not know your acquisition price, hence it would be difficult foir me to give relevant suggestions; however I feel that, you must be aware that GVK Power is among the most indebted infrastructure conglomerates in the country with Rs.26,500 crore net group debt in FY15. 

Off late it has been exploring several strategic options which included listing its airport vertical or sell a minority 49% at its airport holding company to investors or even an outright sale of its economic interests in the Bangalore airport for months. Last year it even mandated investment banks Bank of America Merrill Lynch and Goldman Sachs for the exercise that would have helped retire Rs.3500 crore debt in the vertical and prune group operations. Besides, it is already hobbled with coal-mine acquisition debt and low profitability of its power plants. 

Meanwhile though the Union Budget tried to give some boosting to the power companies/sector, but I feel it is too less and too late for the companies like GVK Power, who are saddled with mammoth debt traps.

In such circumstances, I would suggest you to exit the scrip, at the resistance zone of Rs.7-7.30, on some positive news. On the long term if you want to bet in the power sector, albeit with a little risk then Reliance Power LLtd (Promoters' holding slightly increasing in tbe December quarter) at Rs.46.45, is a better alternative.

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