The Supreme Court’s judgement canceling 214 coal blocks allotted since 1993 has delivered a body blow to the entire mining & metals Industry. Jindal Steel is the worst affected.
Daljeet Kohli and Abhishek Jain had earlier conducted a detailed “scenario analysis” and advised that even in the “worst case scenario”, there was an opportunity to be a contrarian and buy the stock.
However, the duo has now taken a different view of the matter. In their latest advisory, Daljeet and Abhishek have turned cautious about JSPL’s prospects and downgraded it to ‘Hold’ from ‘Buy’.
A detailed rationale for the downgrade has been given but what is important is the bottom-line:
“We advise investors to avoid creating fresh position on the stock. Those who bought the stock at higher level, they can hold the stock till the clarity emerges for coal block auction or shift towards Godawari Power & Ispat Ltd (No impact of this verdict but corrected due to sentimental impact)”.
The advice is to shift to/ buy Godawari Power is noteworthy. Daljeet has earlier issued a detailed report with a price target of Rs. 198. However, though the stock reported good Q1FY15 results, it has been pummeled over the coal block scam issue. In the last one week itself, the stock has lost 11% even though it is unaffected by the Supreme Court’s order. Given that the CMP is Rs. 143, there is a 38% upside, if Daljeet’s analysis comes true. So, one can be a sensible contrarian in Godawari Power, if one is so inclined!