Some of the stocks are good stocks in ADAG. Reliance Communication, the high of January was Rs 820, the stock has fallen to Rs 590.
One has reservations about the telecom space but in terms of pure valuations that presents a fairly attractive and compelling kind of proposition.
Reliance Capital, which was close to Rs 3,000 and now collapsed to Rs 1,600; I think there is value. But the problem with this kind of stocks is that they became such big concept plays, financial services, super houses etc that even after the fall Reliance Capital is trading at 5.5 times book.
That’s not exactly cheap; it’s still expensive but Rs 3,000 to Rs 1,600 at least some people who are slightly aggressive trader, despite the market hangover on a stock like Reliance Capital now, could still build a case for buying it, at least the business is solid there.
Reliance Energy is also fallen to Rs 1,600, two months back or a month back a high was Rs 2,500; relatively much cheaper than what it was 30-35-40% cheaper. But that might just get linked with Reliance Power’s movements now. Is it very cheap? No. Is it a better bet than Reliance Power?
Almost certainly yes because at least there are some businesses, some cash flows worth talking about. So one has to take a call between Reliance Energy and Reliance Power; one will gravitate towards Reliance Energy because there is a bird in hand and not in the bush as in the case of Reliance Power.
I think, Adlabs was quite a bit of gas, the way the stock run-up to Rs 1,600, I could not understand what was going on there. So I am not surprised that the stock has halved in just about a month to Rs 800 because there was a lot of froth in that stock.
I would be surprised if the stock turns and out performer from here. Even if it bounces or gives an initial bounce, I think it will probably fall in the underperformer category in that group.
RNRL may bounce because it’s fallen very hard last few days. From Rs 250 the stock is down to Rs 124. But the news is that the gas settlement is probably not on anytime soon and the fundamental value for the stocks probably is no more than Rs 30-40.
So that’s a whole bag of gas; one shouldn’t expect a lot of goodies from that.
The group needs to be seen in its entirety, some are good stocks, some are frothy stocks, some are nothing stocks but you need to look at all those separately and not just get painted by — buy all ADAG when its going up and sell all ADAG when its going down. There are some good stocks there which one should look at.
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