Deven Choksey's top picks: Sterlite Tech, Solar Inds

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Deven Choksey's top picks: Sterlite Tech, Solar Inds

Deven Choksey, managing director at KR Choksey Shares and Securities in an interview with CNBC-TV18 picked Sterlite Technologies and Solar Industries as his favourite picks for the day.

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Excerpts from Bazaar on CNBC-TV18 Watch the full show » 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 Sterlite Techno BSE | NSE 30/05/12 Are Mutual Funds betting on Sterlite Techno? Other Stocks in this news Solar Industries India | Power Grid Corporation of India |

Deven Choksey, managing director at KR Choksey Shares and Securities in an interview with CNBC-TV18 picked Sterlite Technologies and Solar Industries as his favourite picks for the day.

"We like the business model of Sterlite Technologies. They have been seeing good amount of order inflows and that is likely to give a boost to their earnings from second quarter onwards. At the current levels, it offers a good opportunity to accumulate this stock," he said.

According to Choksey, Solar Industries is very well placed in terms of their geographical location. They are operating at the highest efficiency level. At the current levels, it presents a good opportunity to buy. The stock is very comfortably placed and can fetch good returns if held from 12-18 months time horizon.

Also Read: Four stocks that can give you good returns

Below is the verbatim transcript of his comments. Also watch the accompanying video.

On Sterlite Technologies

We would like to add Sterlite Technologies to our portfolio now for few reasons. We like the business model of this company, it is basically catering to the infrastructure play into the power segment.

It is also into the 3G and 4G rollout business in the telecommunication side. In the power sector business, orders could not get released last year in plenty from Power Grid's side, there were most of the ancillary units who were supplying to these power sector companies and in case of Sterlite Technologies it was for transmission lines.

They could not have fulfilled their order book substantially as a result of which the results could not come inline with the expectations of the market so the stock price has come down. This can be seen as an opportunity. The stock is quoting at sub-50 price and we believe that at current levels around between Rs 5.75-5.8 earning per share expected in current levels this stock is quoting at substantially discounted valuations now.

We believe that we have an opportunity in this particular stock in the current year. We believe that the company's earnings are going to expand now with the new order book which has started flowing in. It has already started getting executed you may not see the full impact in the first quarter of the financial year but, from Q2-Q3 and Q4 you should be seeing a large impact coming into the books of the company and that should result into hike in the EPS.

So my viewpoint is that it's a good time to accumulate this stock, it is battered down. It is available at a good prospects of earning at least 50% return out of this stock in this year and another 50% going forward in the next financial year can be expected.

On Solar Industries

We like this company because it has got a very good business model. They are into industrial explosive business. An industrial explosive business is required for the mining and the construction activities for explosive purpose.

This company is very well positioned, they have locations in India and in other parts of the world particularly Africa they are also getting in Indonesia. Because of this location advantage that they have which is close to the mining activities, they are in a position to supply their explosives to their customers relatively with higher degree of comforts.

In-turn this company is winning lot of customers and in the process they are operating at a highest efficiency level into the explosive business.  The operating margins and the growth in the business is around 25-30%, this company offers good amount of opportunity to buy at current levels.

They are also into coal mining business. In the coal mining business one of their mine has already got the clearance from government of India and second mine is in the process of obtaining the clearance. So once these two mines are also starting to operate for the coal exploration or if they end up selling these mines this is going to be huge bonanza or inflow of money which would come to the existing shareholders of Solar Industries.

We value this company on sum of the part basis wherein we value the coal business at around Rs 235 and we also value the industrial explosive business at around Rs 730 odd.

This gives us a comfort level of price target of around Rs 950 for this financial year or maybe over 18 months from now. So, to a greater extent this company is comfortably placed and it could give 50% plus kind of appreciation when it is held for 12-18 months.