With a perspective of eight-twelve months, one can go long on Indiabulls Power with a target of Rs 15-15.50. For Anant Raj, Tater he suggested a target of Rs 86 with a six-eight months perspective.
Below is the verbatim transcript of Aashish Tater’s interview on CNBC-TV18
On Indiabulls Power
Indiabulls Power was on our radar right from initial public offer (IPO) where we had an aggressive sell, exit, do not subscribe strategy on this particular stock. This was because we factored in that the execution risk that the company is sitting on is quite high and the price that they were trading at was not tempting enough to go for that risk-off.
Now, the stock has corrected to almost 20 percent of their highs. At current levels given the quality project they have, we would like to take a small risk. It is still a risky bet and we do not advise you to go very aggressive on this particular stock at least for next two quarters.
In last three months we have gone from neutral to bullish on this particular stock where now, the risk reward is favourable for this particular company. The 1,350 megawatt (MW) Amravati Project started its first phase where it commenced with 270 MW of operations.
There is another project near Nagpur, which will start its phase I project by the yearend. That is also 1,350 MW project in a whole 2,700 MW for Indiabulls Power by next year.
Still, there are issues due to which the stock has been beaten down regarding issues in Maharashtra. I still feel that this particular thing has already been factored. When we went through the quant model, we felt there is a possibility that the stock will make a double bottom at around Rs 8.50 and once it crosses Rs 9.70, it will generate a strong buy signal that can take it as high as Rs 15.50.
When we combined our fundamental report, we felt the company will be able to do close to Rs 2-2.50 of EPS once the entire project goes on stream, even at PLF of not more than 70 percent. From next eight-twelve months perspective, a small amount should be invested into a stock like Indiabulls Power.
It is not a penny stock because with Rs 2,200 crore of market cap and equivalent value of enterprise value of more than Rs 4,000 crore, this is one stock which is a candidate where enterprise value will eventually go and stabilise around Rs 7,000 crore. That will be favourable for the equity stock holders.
One can go long on this particular stock for the first target of Rs 15-15.50 and let us see the performance of the company in terms of bottomline. So, from next eight-twelve months perspective on risk reward front, this looks quite attractive at current levels.
On Anant Raj Industries
Before I take a call on real estate or Anant Raj Industries, let me give you a brief snapshot of what actually happened into the Nifty as a whole. 6108 was made and that was the top, then came the testing of 5550 and now it is again going to hit the resistance of 5892. On April 24 to May 4, there is a possibility of a metal selloff.
We have seen part one of the selloff across the globe because we fear that there is a likely delivery based selling from China to various London Metal Exchange (LME) warehouses. This is because the Chinese counterparts are looking to de-reserve their base metal reserves which will be negative for the entire global situation. So, this particular bounce back will see some topsy-turvy bounces on either side that will make market volatile.
When you take a call on safety bets and if someone wants to invest into real estate Anant Raj is one stock where you can enter around at Rs 60-62 odd levels and exit around Rs 86 levels. It happens year on year after years. For last three years, this has been a classical case and you get this kind of move very fast for this particular stock.
If you see the fundamental aspect of this particular stock, the debt levels are not at all high for this company. This is because they are sitting on a land bank which is equivalent to their debt.
The company has guided that they will be relatively debt-free by next fiscal year and the positive cash flows that we are forecasting along with an EPS of Rs 6, gives us a lot of valuation comfort at current levels. So, once you buy at around Rs 62-63, you an easily see Rs 86 from next six to eight months perspective and whenever you see that Rs 86 coming to your screen it is better to book out completely from this stock and again wait for this particular level. This is because there will be large range bound trades happening into the midcap space, real estate space that will be factoring in a rate cut of 50-100 bps and that is how the momentum shifts from the valuation discounting factor.
If you see Rs 122 net asset value (NAV), the company is sitting on which will be adjusted to Rs 128 odd by next fiscal, even at Rs 68-67 it is roughly trading at 0.5 times. Since the company is going to have strong stream of cash flows in for next year, we feel this is one stock that should be looked upon for 25-30 percent returns for this particular fiscal from next six to eight months perspective.
Disclosure: Safe to assume that we may have discussed with clients but we do not hold any of the stocks.