Re: NHPC and SJVN

[Cher]

Hi Chetan,

I need some advice on NHPC and Sutluj (SJVN).

NHPC - 1900 shares @ 36.0 (68,000/-).  What should be the strategy? Buy to average or "Hold"?

SJVN - 2000 shares @ 24.7 (50,000/-). Buy to average out or "Hold"

Didn't know where to post thats why posting it here...

Regards,
Cher

[chetan]

For NHPC, I guess you haven't sold the ones bought in IPO. It is unfortunate that CLEAN Energy Companies are not enjoying the rating they deserve. Here is what Kotak has to say on NHPC,

NHPC has corrected by 28% over the past six months offering an attractive entry point with 20% upside to our fair value of Rs28/share. NHPC offers a stable stream of operational cash flow driven by regulated returns on 5,270 MW of operational capacity (valued at Rs12.5/share) whereas investment and cash and equivalents account for another Rs10/share. NHPC is trading at attractive valuations of 1X FY2012E book and 14X on FY2012E earnings. We upgrade NHPC to BUY and retain our target price of Rs28/share and earning estimate of Rs1.7/share for FY2012E.

SJVN I sold off after the iPO because their was no CAPEX in-sight and hence would be very difficult to get the EPS boost.

Mantra for IPO, always get the Initial Capital that you deploy back into your SB A/C after the listing. Even if their will be Minimal Loos, book it otherwise the Stock tends to go down and down.

In general, it is not necessary that you have to average the same stock. Look at the Money that is deployed and that it has to Grow at some "X" percentage.

[Cher]

Thanks a lot, Chetan.
You are correct, I have NHPC from IPO (Rs. 36/share).  I agree with your Mantra, but I always invest for long-term (5+ years) and in quality IPO's.  E.g., I am still holding Coal India, REC, Power Grid to name a few.  The returns that I have got from these IPO's are good.

Also, if the stock falls more than say 30-40% of IPO price, I start buying it in small quantities not for averaging purpose but to accumulate since it is a good script.

I guess then my strategy, regarding NHPC & SJVN, should be to "Hold" for sometime...

Again, thanks for your time.

Cher