Q: In your midcap picks at Edelweiss you have got names like Orbit and Havells , why do these stories attract you?
A: Orbit is a specialized real estate play in Mumbai that too as a redevelopment guy and again at the higher end. Given that the economy is recovering, I think this is a low cost model for the company and being that it is in the higher end, the profitability margins for the company is pretty good. So that stock looks quite interesting at these levels.
For Havells, I think on the back of the economy regrowth and real estate coming back, they are the largest suppliers to the developers for lighting, fans and wire. This is a company basically which has been a zero debt company with the ROE of more than 25%. In between they had some problems when they are taken over Sylvania in the European state, but I think that is turned around, they have been showing positive EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) month after month. We believe that next year, the Sylvania acquisition is also going to breakeven at the net level. Both these stocks are available pretty cheap. So Havells is still available at around 10-11 times whereas Orbit is available at around 7-8 times.
