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Avinash Gorakshakar, Anagram Capital is bullish on KSB Pumps, Escorts and Indian Metals and Ferro Alloys.

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Excerpts from Bazaar on CNBC-TV18 Watch the full show » RELATED NEWS Equirus Securities' top midcap picks for your portfolio 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

Avinash Gorakshakar, Anagram Capital is bullish on KSB Pumps , Escorts and Indian Metals and Ferro Alloys .

Here is a verbatim transcript of the exclusive interview with Avinash Gorakshakar on CNBC-TV18. Also watch the accompanying video.

Q: Let us start with KSB Pumps, why do you like that one?

A: KSB Pumps is an MNC play in the capital goods space. Typically, this is a reasonably medium-sized company, which makes industrial pumps and industrial valves. We like the company primarily because the company's capital structure and business model is extremely strong. Infact in terms of return ratios, the company has been throwing extremely strong numbers; the RoC (return on capital) for KSB Pumps for December '09, which was the last completed financial year, was in excess of 30%. The return on equity was about 20%.

If we talk about the financials, the company recorded a turnover of close to about Rs 550-560 crore with a bottom-line of roughly about Rs 70 crore. So they had a reasonably good healthy net margin of around 12-12.5% on a small equity of Rs 17 crore. On an EPS (earning per share) of Rs 40 roughly last year, the stock trades at half multiple of roughly about 13 times, this is quite cheap compared to looking at the MNC status of the company and debt free status.

We feel that this year would be a kind of a big leg-up year and there could be significant traction in the top-line as well as margins, considering the sharp improvement in the IIP (index of industrial production) numbers as well as the corporate capex spending numbers. So we have been recommending clients and telling them to accumulate the stock at every decline, even at the current level at around Rs 550. This company could also be a delisting candidate. We expect that within a year the stock can touch a price of Rs 650-675. We have a buy on the stock.

Q: You have a call on Escorts as well. That is a stock that has almost doubled in the last six months and it posted some good results last quarter as well. What are you expecting from that one?

A: Escorts is also typically a turnaround story. You are right that the stock has seen a sharp appreciation in the stock price in the last six months, but we continue to be positive on the stock for the simple reason that typically this company in the past was disliked by investors because it had a huge debt on the balance sheet, its businesses were not properly focused. I think in a last two-three quarters, what we have been seeing is the company has reduced debt from a level of around Rs 800 crore to little under Rs 400 crore. Working capital has improved and the management has now become extremely focused. More importantly, we believe that the tractor volumes this year are going to see good steady rise for Escorts.

Typically for '12, we are extremely bullish. We feel that we could see a very sharp swing in earnings, EPS in the range of Rs 22-23. Considering the fact that the company still has a reasonably good amount of land bank, which it could hive off at a right time, we feel there is a lot of value which can still come off. We have been recommending clients to buy the stock at current level, infact Rs 190 odd levels. We have a target price of Rs 260.