Positive on Parekh Aluminex: Prabhudas Liladhar

Excerpts from Closing Bell 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 Bhagwati Banque BSE | NSE 29/05/12 Are Mutual Funds betting on Bhagwati Banque? Other Stocks in this news Parekh Aluminex |

Ranjeet Kapadia , Head of PCG, Research of Prabhudas Liladhar told CNBC-TV18 that he is positive on Bhagwati Banquets and Parekh Aluminex. For Bhagwati Banquets , Kapadia feels that the margins are likely to improve dramatically over the years whereas for Parekh Aluminex , The company is poised for rapid expansion over the next eighteen months and the valuations are quite attractive.

 

Excerpts from the exclusive interview with Ranjeet Kapadia:

 

 

Q: What is the target that you are setting on Bhagwati Banquets?

 

A: I am setting a target of Rs 120 for this scrip.

 

Q: Why is it that you like it what would be the key drivers that investor need to watch out for?

 

A: The company is in the three big businesses, banqueting facility, hotel facility and catering. Now all these three businesses are integrated into a single company and it helps the company against the vagaries of each individual business and the company has taken clubbed F&B facility for three allied clubs of Ahmedabad namely Rajpat Club, Gujarat Cricket Association and it has also taken Patang Restaurant of F&B facility, so it reduces the risk of the main business. It has a centralized kitchen, which reduces the cost so the margins are likely to improve dramatically over the years.

 

Q: What is your argument in favour of Parekh Aluminex and what is the target price you would have on this one?

 

A: Parekh Aluminex is in the business of aluminium foil containers and aluminium foil rolls, which are the household items and these containers are mainly used currently in airlines and railways to serve the food articles. The company is poised for rapid expansion from 11,500 metric tonne to 28,000 metric tonne over the next eighteen months and the valuation is quite attractive.

 

The stock is available at 7.8 times FY10 valuation and currently, the company has more than 70% market share and that is the only organized player in this segment. Also it is entering into the retail segment and it has got tie up with three major retailers namely Reliance, Adani and Big Bazaar, this is going to be a big driver for the company.

 

Disclosures:

 

I am holding Parekh Aluminex.