Life Insurance Corporation(BSE Code 543526)

The market price of the LIC stock has been going down since its listing. Till now, the price has nosedived from the issue price of Rs 845 to Rs 654, eroding Rs 1.5 billion from investors’ wealth. A research analyst expects the price to fall further in the coming days.

According to him, the business prospects for LIC are on the decline. As is well-known, LIC had a monopoly, in life insurance business enjoying a 100 per cent marketshare in the business. With the opening up of the life insurance segment and after an aggressive marketing drive, private sector players started taking away marketshare from LIC. By 2012, the LIC marketshare was reduced to 72 per cent, and during the last one decade it lost further ground to reach a marketshare of 61 per cent. Experts believe that with higher efficiency, aggressive marketing and with the help of technologies, the private sector will continue to take away marketshare from LIC in the coming years.

Again, the government uses institutions like LIC to save drowning institutions e.g. LIC was asked to save IDBI by investing heavily in the latter. It is also said that top government functionaries have been often directing LIC to invest in stocks of weak companies. All such practices go against the interests of its shareholders

But the million-dollar question is how a government institution can fix an unreasonable and aggressive price of Rs 845 per share – a practice of unscrupulous private sector promoters? Why didn’t the regulator of the capital market, SEBI, turn a deaf ear to the bogus advice of self-centred merchant bankers – Kotak, Axis Capital, BOFA Securities, ICICI Securities, JM Financial, Nomura Kfin tech and Goldman Sach (India) and ask them on what ground they had advised to fix such an unduly high price for the issue? Needless to say, policy holders and other investors will lose faith in LIC as may as in SEBI.

(CMP Rs 654.70, 52 week H/L Rs 920/651, BV Rs 17.90, FV Rs 10)

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Deepak Nitrite(BSE Code 506401)

A research analyst who closely observes the corporate scene in Vadodara and Ahmedabad is of the opinion that investors need not worry about the adverse impact of the fire at the Nandesari plant of Deepak Nitrite, as the declining trend in the stock price will not last long.

No doubt, it was a devastating scene on June 2, when the company’s manufacturing facility at Nandesari in Vadodara was engulfed in a massive fire. Fortunately, there were no casualties, but seven workers were hospitalized after nhaling smoke while some 700 people living in the vicinity of the factory were shifted to safe places. The Gujarat government immediately ordered closure of the plant and the share price of Deepak Nitrite, which had reached a 52-week high of Rs 3,020 slumped to Rs 1,775-1,785, as the market sentiment had already been vitiated on account of geo-political disturbances, rising inflation and the bearish environment, and was further depressed by the closure of the plant.

However, the analyst quoted above says that the problem is only for the short term and after the company takes corrective measures as per the government guidelines, the plant will reopen.

As far as the damage is concerned, the company has started knocking at the doors of the insurers for getting its claims settled. Led by New India Assurance, there are more than half a dozen non-life insurance companies with exposure to the company. The insurance companies affected by the explosion at Deepak Nitrite are (with the co-share partners) New India (45 per cent), Future Generali (12.5 per cent), ICICI Lombard (10 per cent), RSA (10 per cent), SBI (7.5 per cent), Tata AIG (5 per cent), RGICL (5 per cent) and Universal Somp (5 per cent). As the risk is distributed among these 8 companies, it will be easier for Deepak to settle the claims easily and promptly.

Of course, the fire at the factory will certainly inflict some damage but it will not stop the pace of growth of the company once the factory resumes production. The company has planned an ambitious growth plan to implement greenfield expansion at Dahej and brownfield expansion at the Nandesari, Roha and Taloja plants so as to enhance the capacities of key products. It has almost completed brownfield expansion to double IPA capacity to 60,000 mtpa. It is also setting up a world-class technology centre to strengthen R&D. All these developments augur well for the rapid strides the company will make in the next 2 to 3 years.

Again, the stock of Deepak Nitrite is available at a very attractive rate, considering that with the bearish environment and the fire accident at the plant the share has tumbled from the 52-week high to Rs 1,775-1,785. Accumulate at every decline, the analyst strongly recommends.

(CMP Rs 1847.15, 52 week H/L Rs 3020/1712, BV Rs 244.80, FV Re 02)

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RBL Bank(BSE Code 540065)

Pointing out that the RBL Bank stock price has been continuously falling this year, an equity analyst recommends that discerning investors should disinvest their holding in this stock as the chances of any revival are remote in the foreseeable future.

With the bank stock going out of favour with investors, there has been a sustained offering in the scrip which has lost over 60 per cent in value during the last one year. The declining trend continued after CLSA downgraded the stock, the National Stock Exchange put it under a ban for trade on June 15 under the futures and options (F and O) segment, and the sudden and unexpected resignation of Managing Director and CEO Vishwavir Ahuja and the appointment of R Subramania Kumar in his place. Investors have taken all these three developments negatively and have emerged sellers.

The stock price as a result has tumbled from the 52- week high of Rs 226.40 to below the Rs 100-mark and near its 52-week low. The research analyst quoted above insists that investors should disinvest even though the stock price has fallen sharply.

Interestingly, the CEO appointment has raised questions, including the continuity of the existing top leadership at the bank. Maintains CLSA, “While we believe asset quality does not seem to be a problem as of today, this situation could have a potential weakening impact on liabilities and hence impact the bank’s performance and growth trajectory adversely.”

(CMP Rs 81.40, 52 week H/L Rs 227/79, BV Rs 209.00, FV Re 10)

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Dwarikesh Sugar Industries(BSE Code 532610)

An equity research analyst who tracks the sugar sector, among others, is highly optimistic about Dwarikesh Sugar. This, even as its stock price has tumbled from the recent 52- week high of Rs 148.45 to Rs 98.25 in the current meltdown of the stock market. Even though the market sentiment is so jittery that a further fall in the stock price cannot be ruled out at present, he insists that the long-term prospects for the company are highly promising

Dwarikesh Sugar is an integrated conglomerate engaged in the manufacture of sugar, co-generation of power, as well as the manufacture of ethanol and industrial alcohol. It began in 1993 on a modest note by setting up a small sugar plant of 2,500 tcd capacity in Bijnor district of Uttar Pradesh. During the last 29 years, the company has emerged as a multifaceted fast-growing industrial group. Today, its plants with a combined capacity of 21,500 tcd of sugar are located in Bijnor district of UP, at Dwarikesh Nagar at Najbabad and Dwarikesh Puram at Afzalgarh, and at Dwarikesh Dham in Faridabad tehsil of Bareilly district. Today, Dwarikesh Sugar is recognized as one of the most efficient players in the sugar sector in India. Asserts managing director Mr Banka, "Being driven by passion has led Dwarikesh to outperform."

The company has gone from strength to strength on the financial front. During the last seven years, its sales turnover has expanded from Rs 794 crore in fiscal 2016 to Rs 1,974 crore in fiscal 2022, with operating profit more than doubling from Rs 108 crore to Rs 297 crore and the net profit spurting almost four times from Rs 39 crore to Rs 155 crore during this period. The company's financial position is extremely sound, with reserves at the end of March amounting to Rs 654 crore - almost 38 times its equity capital of Rs 19 crore. The company has been paying hefty dividends, the rate for the last year being 200 per cent.

Though the share price has tumbled to below the Rs 100 mark, once the current bearish environment ends the share price is bound to shoot up beyond Rs 150. Discerning investors should accumulate these shares at every decline to reap a rich harvest going ahead.

(CMP Rs 98.10, 52 week H/L Rs 148/62, BV Rs 35.80, FV Rs 01)

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BLS International Services(BSE Code 540073)

A fund manager of an FII (foreign institutional investor) is bullish on BLS International, a small-cap company which has an impeccable reputation for setting benchmarks in the domain of visa, passport, consular, e-governance, attestation, biometric visa and retail services. It also provides citizen services to state and provincial governments across Asia, Africa, Europe, South America, North America and the Middle East.

BLS International, amongst the top three global players in this domain, is a preferred partner for embassies and governments across the world. With over 17 years of experience and having established itself as a partner of choice for client governments worldwide, the company is also recognized as 'Best Under a Billion Company' by Forbes. The Asian company has a robust strength of over 20,000 employees and associates who operate from more than 15,500 centres globally and have helped process over 65 million applications till date.

The company is making steady progress on the financial front. Though its performance was adversely affected during fiscal 2021 on account of the pandemic, it has fast recovered in fiscal 2022 with a sales turnover of Rs 40.27 crore.

The company has now acquired Zero Mass Pvt Ltd (ZMPL) for Rs 120 crore. With this acquisition, BLS International now has the largest business correspondent (BC) network in India. In fact, ZMPL operates the largest BC network for State Bank of India with around 11,500 active CSPs. Apart from SBI, ZMPL has contracts with Utkal Grameen Bank and Karur Vysya Bank. This acquisition will give a boost to the topline as well as bottomline of BLS International.

(CMP Rs 200.65, 52 week H/L Rs 230/63, BV Rs 27.80, FV Re 01)

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