Daljeet Kohli is the Head of Research of IndiaNivesh Securities. He is highly acclaimed for his in-depth and objective research. He has several hits to his credit. He also has his fair share of flop stock picks.
HSIL has always been one of Daljeet’s favourite stocks. He never misses an opportunity to recommend the stock. The stock has rewarded his well over the years though in recent times it is in the doldrums owing to the slow-down in the real estate sector.
Information has now emerged which shows that throughout FY 2014-15, IndiaNivesh Securities systematically got rid of its large holding of HSIL stock.
As of 01.04.2014, IndiaNivesh had 336,652 shares of HSIL to its credit. Thereafter, it intermittently sold its holding in small lots. On a few occasions, it also bought a few shares. As of 17.10.2014, the holding plunged to a paltry 12 shares. On 31.03.2015, the holding was 1733 shares.
As it turns out, the decision to sell HSIL was a prudent one because after 01.04.2015, the stock has been on a steady decline. In fact, IndiaNivesh timed their sales perfectly. They sold when the stock price was rising. The stock was at Rs. 131 on 01.04.2014. It surged to Rs. 355 on 30.09.2014. By 31.03.2015, the stock had surged to Rs. 447. Thereafter, the stock slumped steadily. The CMP is Rs. 263.
This means that whoever in IndiaNivesh engineered the sale of the stock had the correct sense that HSIL was peaking. He skimmed off the gravy and got off the train just as it began its downhill journey.
At this stage, we must note that there is nothing to be alarmed about the fact that a securities firm may, in respect of its proprietary holding, do the opposite of what its research section may be advising. Most well-managed securities firms have a “Chinese wall” which virtually separates the various sections of the firm. In a typical situation, the research desk may not be aware of what the trading desk is doing, and vice versa.
If we objectively evaluate HSIL on its own merits, we cannot fault Daljeet’s recommendation to buy HSIL. It cannot be denied that HSIL has a “strong brand, variety of product portfolio, and very strong distribution network across the country” and that the “bleak demand scenario is a short term phenomenon”. In fact, the same buy advice has been offered by Emkay and Vikas Sethi as well. Even Porinju Veliyath recommended HSIL as one of the top five value picks recently.