Stock News: Best Share to Buy L&T | Mind Tree | PNB

Stock News L&T,MindTree,PNB

Positive global cues and strong FII’s buying helped Indian share market to touch almost on the peak. The domestic clues also fueled the market and it is getting strengthen day by day. The news of L&T's Hostile Takeover and arrest of Nirav Modi volatile the stocks like MindTree, L&T, and PNB this week.

L&T vs MindTree: The Hostile Takeover

On Monday,18th March L&T signed a deal to acquire 20.3 percent of its lead investor VG Siddhartha. L&T will increase its share to 66.3 percent through a combination of open offer and buying shares in the market. L&T is offering Rs 980 per shares for MindTree.

MindTree promoters said that they would oppose the hostile takeover bid of Larsen and Toubro (L&T). On Wednesday, 20th March MindTree Board has deferred the decision on Buyback of Shares. MindTree would meet again on 26th March as it faces a Rs 10,800 cr Hostile takeover bid from L&T.

Nirav Modi PNB Scam:

PNB scam by Nirav Modi and Mehul Choksi shocked the Indian Stock Market in February 2018. It was more than 2 Billion USD scam, one of the biggest banking scam in India. The PNB Brady House Branch had issued a Letter of Undertaking (LOUs) without any collateral at the bank. And on renewal fresh LOUs were issued to rotate the amount.

Last week Nirav Modi has been identified in the UK. The arrest warrant was issued immediately by the UK government. On 20th March afternoon he was arrested in London. The UK court rejected his bail plea. Indian Agencies have stepped up efforts to expedite Nirav Modi, the PNB scammer’s extradition to India

Also, read: Best Stock Investing Strategy| Earn Money from Stock Market

How the Share Price of L&T, Mindtree, and PNB behaved after the news

L&T Share Price Movement

L&T announced share buyback in Oct 2018 at Rs 1475 per equity share aggregating Rs 9,000 Cr. The buyback got a big blow in the month of January, the regulatory authority SEBI has rejected the proposal. The share price of L&T fell from Rs 1450 to 1216 in two months.

On Monday, 18th March L&T shocks the IT Industry with Hostile Takeover news. The share price of L&T was down almost 2.5 percent on 19th March. Again on 20th, it becomes stable gained 1.5 percent. Presently the share price of L&T is at Rs 1395 almost up 2 percent

Mindtree Share Price Movement

Mindtree share price got upward momentum in the second week of March after the news of takeover. The share price of Mindtree was almost up 4 percent even before L&T signed the deal. On 19th March the share price fell almost 2 percent. Currently, the share price of Mindtree is trading at Rs 940 almost 1 percent down.

PNB Share Price Movement

When the PNB Nirav Modi scam was detected the share price of PNB fell from Rs 160 to Rs 60 only. Market experts were expecting the share price of PNB to move below Rs 50 but it took support at 58.40. The share price of PNB was hovering around Rs 65 to Rs 75 for more than three months. Currently, PNB is trading at Rs 90-92 per share.

What should you do?  Which one should you buy?

Indian stock market is almost on the record high, taking a call on above three shares is a bit risky. The analyses of L&T, PNB, and MindTree are given below this can help you to take a decision on these stocks

L&T -

Currently, the share price of L&T is quite attractive. Many brokerage houses have recommended to Buy for the target of 1700 to 1900 for the long term. The delivery volume of L&T has increased after the news of Mindtree Hostile takeover news. L&T was initially trying to buy back its shares but SEBI has raised an objection. Then the company decided to use the reserve fund by acquiring the fundamentally strong midcap IT company.

The L&T share is volatile because of takeover news, but it won't fly unless it completes the process of acquisition. The biggest challenge for L&T would be retention of MindTree’s manpower. L&T may not merge the MindTree and L&T Infotech at this moment. After a period of one to two years down the line, one can see the result of this takeover. L&T may not get any mileage from this takeover but the current market share price of L&T is very attractive. An investor can accumulate for the target of Rs 1520 in one-year time horizon.

MindTree-

The Board members of Mindtree has opposed the hostile takeover by L&T. The members are meeting again on 26th March to decide about the buyback. The members would check out the corpus of reserve and cash to be used for buyback of shares and its price. The share price of MindTree may be down until the decision are taken for buyback. The movement Mindtree share price will then depends on buyback decision and its price.

The management of MindTree is going to change and the new management plan is not yet clear. It will take time to show the performance, you can definitely accumulate for the long term perspective. In the short term also one can buy to take the benefit of volatility.

PNB:

The share price of PNB has increased by more than 30 percent in one month. PNB is one of the most undervalued mid-cap PSU banks. The Nirav Modi PNB scam has shaken the fundamentals of the bank. The recent arrest of Nirav Modi at London has improved the sentiment and contributed only 4 percent hike in total. Though the sentiment has improved by the news of Nirav Modi's arrest but it would be very difficult to recover any amount from the Nirav Modi at this stage.

The recovery through NCLT, capital infusions, better asset quality have improved the sentiment of the PSU banking sector in late 2018. The news of Nirav Modi’s arrest has just improved the sentiment of PNB shares, one can hardly see any appreciation in share price. The market analyst are very optimistic in the PSU banking sector for the short term point of view so one can buy the PNB share for the target of  Rs 102 to 105

Conclusion:

Out of the three stocks, L&T is the Nifty 50 stocks/large cap and the other two are mid-caps. You can always accumulate L&T for the target of 1520 for a one-year horizon. MindTree can be accumulated for a short term perspective to get the benefit of a buyback. You can accumulate PNB for short to mid-term for the target of Rs 102-105 per share.

Also, read How to protect your Portfolio and Make Money from the Stock Market Crash

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Finogyan Team

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