Stocks To Buy: 2 Nifty Stocks At 52-Weeks Lows, Opportunity Or A Trap?

Financing company for housing construction

Financing company for housing construction

The stock has hit a new 52-week low of Rs 2026. The shares last traded at Rs 2058. Now we all know that a merger between HDFC and HDFC Bank is in the pipeline and individuals will buy 42 shares of HDFC Bank receive if they have 25 HDFC shares. Our calculations show that if you buy 25 shares of HDFC now, you would spend about Rs 51,450 and in turn would get 42 shares of HDFC Bank, which is worth Rs 54,432 at the current market price of Rs 1296. So it makes sense to just HDFC and not HDFC Bank. From a fundamental perspective, HDFC’s huge holdings in HDFC Bank, HDFC Mutual Fund, HDFC Life etc. are themselves worth Rs 1000 and above per share. This means that the core business is valued at just Rs 1000 which is just over 12 times the profit. That’s extremely cheap for a Nifty company.

Why has HDFC stock crashed to a 52-week low?

Why has HDFC stock crashed to a 52-week low?

HDFC was a stock in which foreign portfolio investors owned huge amounts. They are now loading stocks as interest rates rise around the world. HDFC is a very liquid counter, which is why we are seeing large-scale selling in the stock. For the stock to recover, there must be limited settlement by foreign portfolio investors, otherwise we may see further price decline. Our own belief is that in principle there is nothing wrong with the stock. After the merger with HDFC Bank, a number of issues will have to be resolved. The authorities must also approve the merger. It’s hard to say what will happen to the merger. However, looking at how things are now, we believe the stock is undervalued and offers a good opportunity to buy at current levels.

Tata Steel

Tata Steel

This is another stock that hit its 52-week low of Rs 854 before recovering. As things stand now and looking at the FY 2021-22 numbers, they were extremely good. However, markets look to the future and not to the past. In any case, let’s tell you the numbers from the past. Based on past EPS (FY 2021-22), the stock is trading at an ap/e of just 4 times and a 4.5% dividend yield. The shares are currently available with a stock split of 1:10. The company also repaid significant debt in 2021-22. All these things are a big positive for Tata Steel’s progress and its reasons to recommend buying the stock

Tata Steel: What awaits us?

Tata Steel: What awaits us?

The reason the stock has fallen to a 52-week low is that things are looking a little tough in fiscal year 2022-23. Steel prices have already fallen and the government raising the export tax on steel has not helped. Apart from that, there are fears that rising interest rates could have a cascading impact on the economy and thus steel prices. Tata Steel had a few good years when steel prices were good. Things are looking tough right now and it’s hard to say in which direction things would go. That said, the stock has significantly corrected from its 52-week high. We believe that if you get the stock around Rs 850 levels then it would be worth buying. There are risks, given the high beta of steel stocks, but that is the nature of stock markets.

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