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Dividend paying stock picks
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in over 22 oil & gas blocks, stake in city gas and CNG distribution (jointly with Gail) businesses, investment in MRPL (17 per cent stake worth Rs 2,000 crore) and a vast marketing network of over 8,000 petrol pumps, are some valuable assets that are perhaps not reflecting in the stocks valuation.
HCL Infosystems
HCL Infosystems, a leading player in the personal computer (PC) and enterprise hardware segment, has seen its share price decline 57 per cent from its peak in January 2008.
This is partly due to the market correction besides, concerns over growth in its telecom business (distribution rights for Nokia GSM phones) and slowdown in the domestic PC demand.
However, these concerns are temporary and pertain to the rising PC prices and high interest rates impacting PC demand. However, the company is still expected to maintain a growth of 20-22 per cent on the back of growing PC penetration in the country and the initiatives of e-governance.
The PC penetration in the country has tripled to about 18 per 1,000 people in 2006, which the government targets to increase it to 65 per 1,000 people.
HCL Infosystems markets under its own brand and has captured 15.5 per cent market share in the domestic desktop segment and 7.4 per cent in the laptop segment. Even as the desktop market is growing at 20 per cent, the laptop segment is growing faster.
HCL Infosystems, which is considered to be among the low cost manufacturers of laptops will benefit from the higher demand.
Also, a part of its growth will be led by its distribution rights for the sales of Nokia’s GSM phones (even as 50 per cent of the distribution rights have been returned back to Nokia), mainly the replacement market for GSM phones.
Plans to enter into distribution alliance with Kodak and Apple are also taking shape. At Rs 129.80, the stock trades at 5.8 times CY09 (June ending) estimated earnings and offers a dividend yield of 6.31 per cent.
LIC Housing Finance
LIC Housing Finance is among the top five housing finance players in the country. LIC Housing derives over 90 per cent of its income from loans disbursed to retail customers.
Since the past two years, the company has turned aggressive in terms of growing its business, improving efficiencies and enhancing its risk management capabilities.
Compared to 10 per cent net income growth largely seen earlier, net income has risen 17 per cent and 41 per cent while profit growth has been robust at 34 per cent and 39 per cent in FY07 and FY08, respectively.
For Q1FY09, net interest income grew 43 per cent to Rs 150 crore and net profit was up 124 per cent to Rs 105 crore (partly due to lower provisioning) compared to Q1FY08.
Its non-performing assets (NPAs) declined from 7 per cent in FY05 to about 1 per cent in FY08. Even as the macro environment has turned difficult, analysts don’t expect net NPA levels to rise significantly.
Notably, its net interest margins (NIMs) have remained robust at over 2.8 per cent in FY08 (2.4 per cent in FY07), as the company ha |
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