I am thinking of investing in shares at a slow pace, in a systematic manner. Before that, I want to confirm from you about the route I plan to take. I want to buy shares in private banking companies such as Federal Bank, KVB, Yes Bank and good pharma companies like Lupin, Dr. Reddys, Sun Pharma, etc. Please suggest which of these companies should I buy and at what level for an investment which is medium- to long-term.
– P V A V Krishnan
Your decision to systematically invest in equity is sensible and private banks are good investing options to start with as they are doing better than public sector banks in terms of asset quality and efficiency. The table above has private sector banks excluding the large-cap banks such as HDFC which are already very expensive. Among the list, Federal Bank has gross non-performing assets of 3.85 per cent of total advances which is very high among the peers so you can avoid it. It also has high NIM because of low provisioning of NPAs. Yes bank and ING Vysya Bank are the leaders among the peers but are relatively expensive. You can invest systematically in City Union Bank and accumulate Yes bank and ING Vysya Bank as and when they are available at a lower valuation.
Pharmaceutical companies are defensive stocks which can cushion your portfolio during a bearish market hence you can also include these companies in your portfolio. Pharmaceutical companies (Table below) have a sound fundamental and growth record where one can invest. Ajanta Pharma, Dr Reddys Laboratories, Ipca Laboratory and Sun Pharmaceuticals are more promising companies at the time where you can systematically invest.
This article was originally published on April 04, 2013.
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