IRFC shares hit 1-yr low; may slip further, says Globe Capital's Gaurav Sharma; HAL attractive for long term

Globe Capital's Gaurav Sharma has advised caution on Indian Railway Finance Corporation Ltd (IRFC) and the broader railway pack from a short-term trading perspective. Sharing his view on IRFC, the market expert said the stock has already delivered significant gains over the past year but is now undergoing consolidation.

"IRFC has been a wealth creator. It has rallied from as low as the Rs 30-odd level and gone up to Rs 200-plus levels in a very short span of time. Thereafter, what we are seeing is some profit-taking and consolidation happening. This is somewhat a common factor that we have seen and witnessed in almost all of the railway-related stocks. They have rallied one way up move in one, one and a HALf years. They have multi-folded majority of them have three-folded in just a short span of one-odd year. Post this, almost all of them are into consolidation, and there are no meaningful signs of any reversals. And the same is the case with IRFC. I still do not find any signs of concrete signs of reversals coming in anytime soon. Rather, there is a bright possibility that it will further slip towards Rs 92-95-odd levels. So I think it is advised that we should avoid it as of now, especially from a trading standpoint," Sharma told Business Today on Wednesday.

He maintained a cautious outlook on the entire railway segment in the near term.

Meanwhile, IRFC's offer-for-sale (OFS) opened on Wednesday for non-retail investors and will open for retail investors on Thursday, February 26. The floor price for the offer has been fixed at Rs 104 per share.

The government plans to divest a 2 per cent stake in the railway PSU, with an additional 2 per cent through a green shoe option. Under the OFS, over 26.13 crore equity shares are set to be sold, with the option to offload another 26.13 crore shares in case of oversubscription.

On Hindustan Aeronautics Ltd (HAL), Sharma said, "For a long-term perspective, HAL is at attractive levels. The business model is robust and the kind of modernisation the Indian armed forces are undergoing currently, HAL has a sweet spot here. So, from a longer-term (1 to 3-year) perspective, HAL is a good buy. But from a near-term trading standpoint, I'd rather avoid it."

At last check, IRFC shares were trading 4.07 per cent lower at Rs 104.95, after hitting a 52-week low of Rs 104.70 in early trade. Meanwhile, HAL was up 1.01 per cent at Rs 3,992.85.