Positive about Goldiam's retail foray: Motilal Oswal Sec

25590 Investors following Apollo Tyres. Share this News with them.

0

Like this story, share it with millions of investors on M3

Positive about Goldiam's retail foray: Motilal Oswal Sec

Head of PCG research at Motilal Oswal Securities, Shrinath Mithanthaya says that Goldiam International and Ipca are two good picks.

Post your opinion here

 

0

Tweet

Share on Tumblr

Excerpts from Midcap Radar 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

Head of PCG research at Motilal Oswal Securities, Shrinath Mithanthaya says that Goldiam International and Ipca are two good picks. He positively views Goldiam's retail foray in India. As regards Ipca, he says the company has aggressive plans to tap the US generic space.

Excerpts from CNBC - TV18's exclusive interview with Shrinath Mithanthaya:

Q: We will first start off with some of the picks that you have recommended from book profits to buy: Goldiam International and Ipca Labs . Take us through a couple of those and tell us why have you actually re-rated those stocks?

A: Basically, we have scanned across our universe. We came across three broad themes. The first one is infrastructure. We like a couple of infrastructure stocks like Era Constructions and Pratibha Industries and also Man Industries .  We also looked at capital goods and said companies like Genus Overseas , KSB Pumps and Stone India looked good. Finally, we came down to a segment called Lifestyle, where a couple of stocks looked interesting. Goldiam International happened to be one of those.

Hitherto, Goldiam International has largely been an exporter of diamond set and jewellery. It has ruled out its retail strategy, which is in line with the rising prices of gold. Their unique product is silver studded jewellery with American diamonds. The brand name is 'OLA'. It has just rolled out in India. The first outlet has come up in the Atria Mall in Worli. We are quite optimistic about their retail foray in India.

On Ipca, we had a book profit because the stock price had run up and not too much was happening in the company. Going forward, we have a clearer visibility of its game plan. Basically, newer molecules are coming up. There are aggressive plans to tap the US generic space. So we are clear about Ipca's plans.

Q: You have also maintained a contrarion call on MRF , Apollo as well as Ceat ? What is that you like about the tyre space in the light of rubber prices going up?

A: Everybody is talking simply of the rubber prices. Obviously, companies do not come out openly and say that they have hiked product prices as well. But it is obvious that to survive this kind of price hikes, companies will need to resort to product price hikes, which they have done.

In our research, both with OEMs (Original Equipment Manufacturer) and the dealers and tyre companies, we are clear that companies have taken anywhere between 25-30% price hikes over the last three months in phases obviously. This has been the highest price hike ever. It is partly collaborated by shrinking margins of the auto companies.

They have put it to rising rubber prices. They have not put it to rubber prices. But tyre prices are affecting the margins of auto companies as well. It is something that the market is not fully aware of and hence it is a contrarion call.

We are positive on tyre. MRF and Apollo are all available at their lowest valuations ever in terms of price to book and cash PE.

Q: Could you highlight why Atlas Copco would be so high on your priority list?

A: It is not very high on the priority list in the sense that when we looked at it, it was about 15-20% lower than the current levels. Our target price is about Rs 725. So, currently, we have a hold on the stock but clearly it is a great play on the overall industrial, construction and mining activity, which is happening.

In 2004, they acquired Ingersoll Rand (India) mining equipment business and strengthened their position further in the mining industry. Another interesting avenue opening up for them is CNG compressors.

In India and China, there is a major thrust on CNG. Given the current hike in petrol and diesel prices, we have an estimate of a market worth Rs 500-1.5 billion opening up for India in about 14-16 major cities.

Q: Any disclosures

A: To the best of my knowledge, none.