I want know what to do in Electrosteel casting and JP Power (200 and 300)

Can you indicate your rationale for investing in these stocks? When did you buy them? At what rate? What is your holding period? What percentage of your portfolio is made up of these stocks?

 

You have not stated the rationale behind buying these two stocks. Anyway, I did a quick status check.

Electrosteel Castings is quoting at a cheap valuation. However, the reason for that appears to be its poor fundamentals. The growth is virtually stagnant over the past five years. Also the ROE is quite low at an average of about 4%. The two major areas of concern is the fact that the company was recently raided by the CBI over a scam relating to the allotment of a coal block. This will be a major overhang. Also, there is a contingent liability of Rs. 750 crore in the Company’s balance sheet.

JP Power is also a stock with dubious fundamentals. Its average ROE is also less than 5% over the past three years. It is heavily indebted. It is in a very capital intensive business.

So, I think you have to seriously consider whether Electrosteel Castings & JP Power are investment grade stock. You have to be a very long-term investor and even then you would not be sure.