DHFL, Akzo Nobel, Lemon Tree and other stocks holding out while the rest of the market is melting
- India’s stock market lost over ₹5 lakh crore (over $70 billion) of investor wealth in the opening minutes of the trade.
- The panic sell-off in the Indian market is the continuation of the carnage seen on Wall Street due to the coronavirus epidemic.
- However, there are a few stocks on the Bombay Stock Exchange (Group A) that are holding out in the green, each for a different reason
- Here’s a look at what’s keeping them strong in the face of the rampage by the bears.
India’s stock market is melting and the fear of the coronavirus epidemic has washed away over ₹5 lakh crore (over $70 billion) of market capitalisation in the opening minutes of the trade.
The Sensex has lost over a 1,000 points and all its components are in the red. The panic sell-off in the Indian market is the continuation of the carnage seen on Wall Street.
However, there are a few stocks on the Bombay Stock Exchange (Group A) that are holding out in the green, each for a different reason. Here’s a look at what’s keeping them strong.
1.
DHFLIronically, bankrupt mortgage financier Dewan Housing Finance (DHFL) is top of the list. The gains have come largely because the company’s lenders have decided the grounds on which the bids for the company will be evaluated, according to a report citing sources. This has stoked hopes of a quicker resolution of the debt and revival of the company.
Nearly 24 applicants had submitted expressions of interest (EoI) — either for the whole company or in parts— to bid for DHFL.The stock is up eight days on the trot.
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2. LEMONTREE
Interestingly, Lemon Tree Hotels is gaining at a time when, globally, airlines, tourism, hospitality and other travel-related industries are facing a downturn. When there is a disease outbreak, people tend to cut back on travelling.
However, the stock had already lost 12% since the start of year. The dent was much more but, in mid-February, the company reported better-than expected earnings driving the stock up for a few days before bears struck again. The cut in goods and services tax (GST) has boosted demand from retail customers, driving average room rate growth, the management told analysts at Motilal Oswal.
Not just Lemon Tree, the revenue per available room for the entire hotel industry in India rose to 5.5%, the highest in three quarters.
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Lemon Tree Hotels is also investing despite the downturn. It announced its foray into Bhutan with its first hotel in the nation's capital, Thimphu. The mid-priced hotel chain said the entry into Bhutan is through its management subsidiary Carnation Hotels. The property in Thimphu is its second hotel in an international destination, the company said in a regulatory filing.
An interesting trend in Lemon Tree is that the stock has bounced from around the ₹52 level at least twice in the last fortnight. Motilal Oswal expects the stock to reach ₹72 a piece in the next one year.
3. NLC INDIA“What really makes money for investors over time—and with- out the hair-raising volatility of hypergrowth stocks—is steady businesses paying regular dividends,” market expert Alexander Green wrote in the foreword to Marc Lichtenfeld’s 2012 book ‘Get Rich With Dividends’. NLC India would fit right into his bucket.
The 60-year old
Navaratna company has been giving back a bigger chunk of its profits to its investors. Part of the reason is that the company is 81.9% owned by the Government of India and high dividends from state-owned companies help the exchequer manage finances. The benefits to banks, mutual funds, institutional investors, and the general public who own the rest of the stock are just incidental.
| Announcement Date | Ex-dividend date | Dividend | Type |
| 27-Feb-20 | 13-Mar-20 | 11.85% | Interim |
| 18-Mar-19 | 26-Mar-19 | 45.30% | Interim |
| 19-Mar-18 | 26-Mar-18 | 42.30% | Interim |
| 20-Mar-17 | 24-Mar-17 | 73.40% | Interim |
| 26-May-16 | 7-Sep-16 | 12% | Final |
| 25-Feb-16 | 14-Mar-16 | 3% | Interim 2 |
| 27-Jan-16 | 11-Feb-16 | 15% | Interim |
| 29-May-15 | 8-Sep-15 | 10% | Final |
| 12-Feb-15 | 26-Feb-15 | 18% | Interim |
| 23-May-14 | 11-Sep-14 | 18% | Final |
| 20-Mar-14 | 26-Mar-14 | 10% | Interim |
| Source: Capital Market |
Most recently, the company announced a 11.8% dividend and the stock has shot up ever since on February 27. The stock has shot up since then. Considering the Indian government needs more resources— given the economic slowdown and sluggish tax collections — other state-owned companies may also dole out high dividends to their masters, benefiting a few investors along the way.
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