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Investment analyst, Ashish Chugh discusses his views on Apollo Sindhoori Capital and JBM Auto. He likes Apollo Sindhoori Capital as it has proved to be a consistent dividend payer. He says that at a price to earnings ratio of Rs 10, JBM Auto looks undervalued.
Investment analyst, Ashish Chugh discusses his views on Apollo Sindhoori Capital and JBM Auto . He likes Apollo Sindhoori Capital as it has shown consistent increase in its revenues and profitability over the past few years, and has proved to be a consistent dividend payer.
He says that at the current price of Rs 115-120, the risk-reward ratio is extremely favorable.
Looking ahead, he sees a lot of potential in JBM Auto, and at a price to earnings ratio of Rs 10, he feels that the stock looks undervalued.
Excerpts from CNBC-TV18's exclusive interview with Ashish Chugh:
Q: Apollo Sindhoori Capital- Why do you like that stock?
A: Apollo Sindhoori Capital is a part of the Apollo Hospital Group. This company is a member of BSE and NSE. This company is also a depositary participant with the NSDL (National Securities Depository Ltd). Apollo Sindhoori also has a subsidiary, which is a member of NCDEX, a commodities exchange.
This company has got a good branch network. It has got a network of 120 branches of its own, and this is coupled with the franchises it has, totaling about more than 450 offices throughout the country.
This company has shown consistent increase in its revenues and profitability over the past few years. For the financial year 2005-06, this company had a total revenue of close to Rs 57 crore and made a profit of around Rs 8.4 crore.
It has got a small equity base of about Rs 5.4 crore, which translates into an EPS of around Rs 17. The company has also been a consistent dividend payer. This company paid a dividend of 60% to the shareholders last year.
In the stock broking industry, we are witnessing a lot of interest from the foreign investors who want to take a stake in the Indian stock broking companies, of late. Recently BNP Paribas has taken a stake in Geojit Financial . Bank of Muscat has recently taken a stake in a lesser-known company called Mangal Keshav Securities, which is a Bombay based brokerage.
There are other companies like Indiabulls , Motilal Oswal and Sharekhan where strategic investors have taken a stake; most of these companies have been richly valued.
Apollo Hospital is trading at price to earnings ratio of just about 7, and it paid a dividend of 60% last year. This looks undervalued compared to many of the valuations, which many of the other stock broking companies have got from the foreign investors.
Apollo Hospital already has a strong relationship with many institutional investors, FIIs and private equity firms. The possibility of Apollo group giving a stake to a foreign investor in this company cannot be totally ruled out. Incase that happens it will certainly be not at the valuations at which it is trading right now.
So you have a company which is a consistent dividend payer and is trading at a reasonable price to earnings ratio. The growth in the business is expected to be good. Even on a conservative basis, it would be between 25-30%. The price to earnings ratio is expected to come down further. At the current price of Rs 115-Rs 120, the reward to risk ratio is extremely favorable.
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Tags: Ashish Chugh, Apollo Sindhoori Capital , Apollo Hospital , NCDEX, BNP Paribas , Geojit Financial, Bank of Muscat , Indiabulls, Motilal Oswal , Sharekhan, JBM Auto , Delhi , Greater Noida, Faridabad , automobile, white goods sector, construction, hydraulic mechanism , Nasik, Mahindra and Mahindra , Renault, France
May 17 2013, 12:38
- in FII View
May 17 2013, 12:39
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