SPARKLING JEWELS FOR A PROSPEROUS DIWALI
By Premium Research Bureau
The festival of lights is here and like every year, we all fervently hope and pray that Goddess Lakshmi continues to bless one and all. This is also the time when we all loosen our purse strings and go shopping in full throttle. And like every year, we present a list of stocks which you should buy to ensure that your next Diwali will be even more ‘dhamakedar!’ These are eleven precious stocks, all jewels which will crown your portfolio, giving it a golden hue and sparkle.
All these stocks are for the long term, at least till next Diwali and remember, it is always patience which pays. These stocks could give you that elusive pot of gold at the end of the rainbow!
Happy Diwali and happy investing!
FORCE MOTORS
Force Motors, formerly Bajaj Tempo, is an integrated automobile company, with brands like Force One SUV, Trax MUV, Traveller (very popular) LCV, Trump commercial vehicle, Trax multi-utility vehicle, Balwan tractor, Orchard tractor and newly launched off-road vehicle Gurkha. The company clocks sales run rate of over 29,000 units annually. Expected FY15 revenue is at around Rs. 2,200 crore and EPS is close to Rs. 60, which discounts current market price by PE of 2/1 times. A well reputed company with an established dealer network, healthy product pipeline and increased promoter interest, Force Motors is a good buy at the current rate of Rs.1290. It has the potential to touch Rs.2000 by next Diwali.
LAKSHMI ELECTRICAL CONTROL SYSTEMS
A part of the Rs 3,000 crore Lakshmi Machine Works (LMW) group, makers of electrical & engineering products, this is a rock solid company, as ethical as ethical can be. Over the next 2-3 years, company is likely to report 20% topline growth and 30% bottomline growth. Promoter pedigree, ethical management, improved industry prospects and extremely attractive valuation make Lakshmi Electric Controls a very attractive buy. Share at Rs.457 qualifies a safe bet with potential to touch Rs. 650 in the next 12 months.
GRAUER & WEIL INDIA LTD
With interests in chemicals, realty, paints, engineering and lube, company is expected to close FY15 with revenue of around Rs.375 crore and EPS of about Rs. 1.4, which discounts the current market price by PE of about 11 times. Intrinsic value of the business and land holdings is much higher, given company’s leadership position in the business coupled with stable and healthy margins. Share at Rs.15 is recommended as a ‘safe’ buy with target price of Rs. 26 over the next 8-10 months. The share can even be a multi-bagger, in the true sense of the term, if held for a time horizon of 4-5 years.
ABAN OFFSHORE
India's largest offshore drilling contractor in the private sector company, the best news in the company is that 2 of the 18 rigs are scheduled for refurbishment in FY15 (same as FY14) indicating that majority of the assets will stay productive with expectation of a strong FY15. In addition, long term contract for 16 rigs ensures healthy revenue visibility. Also the average age of the 18 rigs is 6.5 years, vis-a-vis normal lifespan of 30 years. Thus, a younger fleet helps in higher asset uptime and better realisation. Stock is a great buy at the current rate of Rs.595 to sail smoothly into four digits, with the horizon of Rs.1000 easily within reach within a year.
GLENMARK PHARMA
Glenmark Pharmaceuticals, derived from the late founder’s sons’ names Glen and Mark Saldhana, is a leading pharma player in the discovery of new molecules. It recently announced discovery of first bi-specific antibody, GBR 1302, being developed for breast cancer. This is a significant development in terms of technological achievements and GBR 1302 is a licensable asset, increasing the valuation of the company. Its SEZ in Indore has received the USFDA approval and its new chemical entity to treat arthritis is in human trials stage. Its R&D is also a cash cow today, increasing its overall valuations. The US generic business is expected to lead the growth story and its new product pipeline will be stronger in FY16. Its oral contraceptive launch, expected by Dec’15 will be a very big trigger. This very healthy pharma company, at the current price of Rs.706 holds the potential to move to Rs.950, earning you good profits by next Diwali.
GUJARAT PIPAVAV PORT
The company had the best quarter for period ended 30th June 2014 with container cargo reporting the best performance ever, with consistent performance by bulk and general cargo. Going ahead, volume growth in containers is expected to continue to lead, thanks the increased cargo from two new shipping lines. The company is likely to soon commence liquid cargo and this segment too is expected to add on handsomely to the healthy bottomlines from current quarter onwards. Given its strong parentage with AP Moller group holding 43.01% stake, the strategic location in Gujarat, strong earnings and very healthy cash balance, the stock at the current price of Rs.169 holds tremendous potential to soar to Rs.225 over the next 10-12 months.
AMBUJA CEMENT
This is probably the best cement buy in terms of pricing power and economies of scale. It is this cement company which holds the pricing power in key markets and that always makes Ambuja’s realizations much stronger. The company, using the subdued markets has used the time well to rationalize its costs which, when things perk up will start showing great benefits in terms of increased EBITDA margins. There is a renewed buying seen in cement counters and with Ultra Tech posting much better-than-expected Q2 numbers, Ambuja is also expected to do much better in coming months. A big beneficiary of Govt spending, buy into Ambuja at the current rate of Rs.213 to reap benefits when infra build and realty sector picks up momentum. Expect price of Rs.280 before next Samvat.
POWER FINANCE COPRORATION
With a 20% market share in power finance business, the stock has been in the limelight ever since Modi won the elections. A prime beneficiary of the major reforms planned by Modi, especially in the power sector, which is high of our PM’s agenda, the company is set to see some very good days ahead. Consistent and strong financials, stable asset quality, PFC will do well as infra build picks up. At the current price of Rs.276, profits from this stable stock will light up, spiking up to Rs.325 in the next 8-10 months.
WELSPUN INDIA
The flagship company of the US$ 3 billion Welspun Group, the company did very well in Q2FY15, with a sequential turnaround from a loss of Rs.97 crore to a consolidated net profit of Rs.5 crore. It current pipe order book position stands at around 1,040K MT (Rs. 71 billion). Asia’s largest and world’s second largest terry towel maker in the world, exports drive this company and the outlook from USA, South America and MENA looking very bright. At the current price of Rs.287, the stock has the potential to move to Rs.415 in the next 10-12 months.
ASHOK LEYLAND
The company’s sales figures for Sept’14 were most gratifying with 40% (YoY) rise in Medium & Heavy Commercial Vehicles (M&HCV) and 2% rise in Light Commercial Vehicles (LCV). The M&HCV market is on the uptick as economic recovery lurks round the corner. And Ashok Leyland will ride this uptick with great advantage. It is the largest recipient of bus orders under the Jawaharlal Nehru National Urban Renewal Mission (JNNURM)-II scheme. A total of 22 STUs order India including Calcutta, Bangalore, Andhra Pradesh, Jaipur and Pune have placed large orders with the company. A market leader in Sri Lanka for M&HCVs, Ashok Leyland will give you a fantastic ride from the current price of Rs.44 to Rs.65, in the next 8 to 10 months.
SHRIRAM TRANSPORT FINANCE
The market leader in commercial vehicle (CV) financing, the company is at a crucial juncture – with economic recovery expected in next couple of months, this is the best pick to ride the recovery. It is CVs which are the first to move upwards as soon as recovery happens and Shriram Transport Finance will become the go-to NBFC for CV financing. Given its strong brand presence, the trust it has built over past three decades, it faces no competition from new NBFCs and even banks. Buy into and Shriram Transport Finance at current price of Rs.900 and ride into Rs.1200 before next Diwali.
