Ambareesh Baliga's sub Rs 50 stock picks

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Ambareesh Baliga's sub Rs 50 stock picks

Ambareesh Baliga of Karvy Stock Broking is bullish on four sub-Rs 50 stocks. "One can invest in Shasun Chemicals, Celestial Labs, Radha Madhav Corporation, and Compucom with a target price of Rs 60, Rs 40-45, Rs 25-30 and Rs 24-25 per share, respectively."

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Excerpts from Bazaar on CNBC-TV18 Watch the full show » RELATED NEWS Expert stock/sector picks for next week ALSO READ See what other experts are saying about markets See what FIIs are saying about the markets See what Udayan Mukherjee is saying about the markets

Ambareesh Baliga of Karvy Stock Broking is bullish on four sub-Rs 50 stocks. "One can invest in Shasun Chemicals, Celestial Labs, Radha Madhav Corporation, and Compucom with a target price of Rs 60, Rs 40-45, Rs 25-30 and Rs 24-25 per share, respectively."

Here is a verbatim transcript of an exclusive interview with Ambareesh Baliga on CNBC-TV18. Also watch the accompanying video.

On Celestial Labs :

Celestial Labs is a combination of a technology and a pharmaceutical company. They have bioinformatics, enterprise resource planning (ERP) and molecule development software for the pharma companies. They are also into herbal and allopathic products. So it's a combination of these two.

We expect earnings per share (EPS) of around Rs 10 for this year. Next year it could be Rs 13-14. These are companies, which are trying to put their act in place. That's the biggest risk.

We could see levels of around Rs 60-70 but at least a short to medium-term target is around Rs 40-45.

On Shasun Chemicals :

This is the only company where our comfort level is very high. In fact, we have a price target of around Rs 60-70 for this stock. It's basically into active pharmaceutical ingredients (API). This contributed around 63% of turnover. They are also into contract research and manufacturing services (CRAMS) which should scale up in the next one-two quarters and this is a company, which had problems with derivative forex exposure. The losses for the next two years should be much lower than what we have seen in the recent past. We are looking at an EPS of around Rs 6 for this year and around Rs 9 for next year. Based on that we are looking at a price of Rs 60-70.

On Compucom Software :

This is in a space which is in vogue right now basically education, e-governance software services. They have mainly 3500 government schools and catering to around 10 lakh students. It's shown an EPS of Rs 3.5 this year and is expecting around Rs 4.75 for FY11. It's a dividend paying company. It's not a very low price stock because its Rs 2 paid up. In fact, its quoting at around Rs 85 if you multiply by 5.

It is not a future Educomp Solutions. It's a poor cousin of Educomp. You can compare that with Core Projects & Technologies Ltd to a certain extent but this stock has not performed in the recent past. So looking at the EPS estimates we are expecting that this stock should go to levels of around Rs 24-25.

On Radha Madhav Corporation

This was a highflier sometime back. It was quoting Rs 80-85 levels and people had targeted around Rs 120-125 for this stock around one-and-a-half to two years back. But from there it fell to levels of around Rs 10-12. Currently, it's quoting at around Rs 19-20.

These people are basically into packaging, especially pharmaceutical packaging. But unfortunately they had expanded when the markets had started coming down, the economy was on the downturn and this reflected in the results where they have been reporting losses. But with the facilities which they have - they have sixth largest plan as far as packaging is concerned - so if things work out fine for them going ahead this stock should be a flier. But at least for the time being it would be limited to around Rs 25-30.

Disclaimer:

The stocks discussed are extremely risky for investment and I would only suggest those investors who have made enough money in the market, in the last one year, to put a small amount of capital, which they are willing to lose into these stocks. Otherwise just stay away. Our clients could be interested in these stocks because they would be holding some of them.