Bullish on auto, cement and capital goods: Ashish Shah

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Ashish Shah of A C Choksi Share Brokers is bullish on automobiles, cement and capital goods sectors. "Working for June ending is in line with the market expectation, more or less. So we are bullish on these sectors," he says.

He is also bullish about SEA marine. He thinks that the company's stock price will see 50-70% appreciation in one-two years' time.

Excerpts from CNBC-TV18's exclusive interview with Ashish Shah:

Q: What are the sectors, you have changed your opinion on post-corporate earnings, post the interest rate scenario and the change that we have seen in the commodity space and in basic fundamentals?

A: Post June working, we are still bullish on sectors like automobiles and cement. Capital goods sector still holds good for the market. Working for June ending is more or less in line with the market expectation. So basically we are bullish on these sectors.

Q: SEA Marine's results were good. What do you expect the target to be on this one?

A: SEA Marine is an interesting story, when it is compared with Aban Loyd Chiles Offshores . This company has a deployed three vessels with ONGC. It is a zero debt company with a Rs 34 crore of paid up capital.

Currently, it is operating at full capacity. They are in a process of adding fourth vessel with a zero debt status. With higher rates, this company is expected to do well in next two-three years. With high oil prices and with exploration in demand, we expect this company to command higher rates.

Q: What will be a price target on this one from the current levels of about Rs 170?

A: From Rs 170 levels, one can expect around 50-70% appreciation in one-two years' time.

Q: Take us through the preference you seem to have for the power ancillary segment, because both your next two picks belong to that space- RTS Power Corp and Jyoti Ltd ?

A: These are smallcap companies in transmission section. But where the big companies like ABB or Siemens are quoting a price multiple of 30, these companies are available at a discount rate of seven-eight. With growth expected in this sector, one should not stay away from such stocks. With the government expenditure on the power sector and located expansion plans these are the companies, which one should target.

Q: What could be the concerns in terms of their debt burden or stacked up order books?

A: In case of RTS Power Corporation, the main customer is State Electricity Board and the major concern will be the delay in receivables from the State Electricity Board or high raw material prices. But looking at the thrust over the power sector by the government, we do not see much problem from the State Electricity Board towards payments.

Q: What target do you have for RTS Power and Jyoti Ltd?

A: RTS Power could be seen in a price target of around Rs 150 levels from this rate. In case of Jyoti Ltd, we expect a decent appreciation of around 40-50%.

Q: How much time frame are you recommending for them?

A: At least one year for any midcap stock till all expansion plans are over.

Disclosure:

It is safe to assume that my clients might have an exposure in any of the stocks we discussed.