Is it a Good Time to Invest in PVR and Inox Leisure Shares?
With the ongoing vaccination efforts and decreasing risks of a bigger wave, many investors are pondering the right time to invest in the PVR and Inox Leisure shares. The following insights aim to offer guidance based on the current market conditions and performance indicators.
Understanding the Market Context
The vaccination process is reportedly yielding positive results, and the probability of another significant wave has diminished. This development paves the way for a potential recovery in the entertainment sector, which includes cinema chains. However, it's crucial to understand that the road to normalization will be gradual and laden with challenges.
Analyzing PVR Shares: A Strategic Buying Opportunity
According to Manikandan R, the PVR shares are experiencing a surge and have surpassed 1450 in the current month. Despite issues like the second wave of infections, the stock's trajectory is showing promising signs. Currently trading at around 1587, it's advisable to buy PVR shares gradually, starting below 1500 and aiming for a target of 1700. Investors should hold for a couple of months before exiting:
Key Points for PVR Shares
Buy starting from October and aim to get into the stock as close to 1450 as possible. Start purchasing below 1500 and be patient in waiting for the stock to approach 1700. Plan to exit the investment around 1700.Investing in Inox Leisure: Similar but with Caution
Inox Leisure similarly presents a buy opportunity, though with caution. The stock has been showing similar chart patterns as seen in PVR. Currently trading at 380, there is a suggestion to purchase below 350 around October, ideally aiming to get as close to 340 as possible. The target range for Inox Leisure is set at 400-410, beyond which it is not recommended to hold the investment.
Key Points for Inox Leisure Shares
Focus on buying Inox Leisure shares below 350 in October. Target a price range of 400-410 for investment. Consider exiting if the stock surpasses 410.Current Challenges Facing PVR and Inox Leisure
Although the vaccine rollout offers hope, the Bollywood industry continues to face challenges. Major cities, notably Mumbai, Pune, Hyderabad, Chennai, Bangalore, Kolkata, and many others, have restrictions against multiplex operations. Even if operations are allowed, they will be severely limited to a capacity of 30-35%. As a result, the performance in July to September is expected to suffer.
Investors are advised to wait until at least October 15th before considering any investment. This delay could offer further discounted prices and better opportunities for growth in the future.
Technical Analysis and Valuation of PVR and Inox Leisure
For both PVR and Inox Leisure, the technical analysis doesn't showcase strong upward trends. PVR doesn't have a pronounced chart pattern, indicating that buyers are actively trying to enter the market. Meanwhile, Inox Leisure displays strong buy signals, particularly when considering the Heikin Ashi and normal candlestick analysis.
However, the valuation of both stocks is concerning. Inox Leisure has a ROCE (Return on Capital Employed) of 9.9, signifying a very expensive valuation, and an Enterprise Value to Capital Employed ratio of 1.5, which suggests potential short to medium-term decline. Additionally, the company's operating profit to interest ratio is the lowest in the last six quarters, indicating increasing financial strain.
Analogously, PVR has a ROCE of 8.9, making it equally expensive, and an Enterprise Value to Capital Employed ratio of 1.8, also hinting at potential declines. Furthermore, PVR is witnessing poor sales and revenue, with no hope for expansion in the next year.
Alternative Investment Suggestion
For those seeking growth-oriented investments, Marksans Pharma Ltd. is recommended. Always prioritize investing in a stock of a growing company rather than just a stock for short-term gains. Understanding the business model and underlying fundamentals is crucial before making a decision.
For investors looking for curated investment ideas, it's recommended to follow the Facebook page: HighStockPick. This page regularly features investment stock ideas and offers premium sections for serious stock investors with strong fundamental analyses.
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