CD Equisearch bullish on Videocon Inds, Garware Offshore

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Speaking to CNBC-TV18, Nilesh Vasa of CD Equisearch said that his top midcap picks are Videocon, Garware Offshore and Allahabad Bank. Vasa said that Videocon plans to open 300 electronic stores for lifestyle products and have tied-up with a company in Japan for high-tech flat panels.

 

Garware Offshore looks promising as there is a huge demand for offshore vessels, with an emphasis on oil exploration and drilling, added Vasa. With respect to Allahabad Bank, there is a 56% jump in operating profit, with a 28% jump in net profit and the NIM is 2.9%, which is reasonable, he commented.

 

Excerpts from CNBC-TV18's exclusive interview with Nilesh Vasa:

 

Q: Videocon is becoming an oil and gas play. Why do you like the stock and what is your target on it?

 

A: Yes, that is precisely right. Basically, though it is into consumer durables and components, oil and gas is the basic trigger. Their oil block in Oman has got a capacity of one billion barrels. That is very high. They are also getting into bidding for coal. Locally, they are into SEZs. They are getting into alternate energy and the solar photovoltaic is a big trigger for them.

 

They plan to open 300 electronic stores for lifestyle products. So, they are getting into the right sort of businesses, which is very promising. They have also tied up to get into high-tech flat panels with a company in Japan. So, it is good combination of technology consumer durables and the coal and gas is a good trigger also.

 

It is a very small capital company, considering that they want to get into so many businesses. So, apart from dilution, the capital is just Rs 22 crore at the moment and public holding is very restricted in this sort of script.

 

Q: What is the kind of upside that Garware Offshore packed in from here?

 

A: Garware Offshore looks promising on two counts-there is huge demand for offshore vessels, with the emphasis on oil exploration and drilling. At the same time, there is a real shortage of supply in this area. So, the pricing and realisation have gone up.

 

Garware Offshore is a Rs 14 crore capital company and is well positioned. They are getting into acquiring new vessels also. So, it is a promising story, if someone wants to get into offshore-related activity.

 

Q: How about Allahabad Bank ? The banking sector results have been relatively good?

 

A: This quarter has been exceedingly good. There is a 56% jump in operating profit, with a 28% jump in net profits. The NIM is 2.9%, which is reasonable.

 

The NPAs have come down to only 0.6%. So, that is good in itself and the other trigger is that they are getting into insurance. They are getting into a JV for insurance with SOMPO, Japan.

 

Allahabad Bank will hold 30% and SOMPO 26% in the JV. Plus IOB, Karnataka Bank and Dabur will also be there. So, that is a good trigger and we see this stock actually getting rerated from here.

 

Six-months down the line, there may be a 50% appreciation from here in Allahabad Bank.

 

Disclosures:

These are recommendations to our clients. But personally, I do not hold these stocks.