Sharekhan shares trading tips on 3 top bets

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Sharekhan shares trading tips on 3 top bets

In an exclusive interview to CNBC-TV18, Hemang Jani, senior vice president of Sharekhan picks CESC with a target of about Rs 400, over the next 12 months. His other pick Aditya Birla Nuvo, Jani believes is likely to see a 20-25% upside, and also, picks V-Guard Industries, which he says is likely to have profit margin of 12-14%.

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Excerpts from Markets Midday 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

In an exclusive interview to CNBC-TV18, Hemang Jani, senior vice president of Sharekhan picks CESC with a target of about Rs 400, over the next 12 months. His other pick Aditya Birla Nuvo , Jani believes is likely to see a 20-25% upside. Also, Jani says  V-Guard Industries , can have a profit margin of 12-14%.

Jain also says, he sees an earning downgrade coming soon as the weakness in the market continues to prevail.

Below is an edited transcript of Hemang Jani's interview to CNBC-TV18. Also watch the accompanying video.

Q: What are you making of the weakness seen in many of these ADAG names? What kind of trade would you recommend on them either for medium-term or long-term?

A: We feel that the overall market sentiment continues to be weak in the wake of bad global sentiments. We are going to move into earning downgrade, though there is not much of clarity how much the downgrades would be. The overall bias seems to be little cautious to the downside. You may see a bit of a pullback because we are oversold. But there is not a case for a substantial upside in the market, in the short run

Q: You have a buy target on CESC, could you take us through that?

A: CESC is a power generating and distributing company based in Kolkata. It is doing pretty well in terms of adding new cash flows to the overall operation and there is going to be steady growth because of the expansion of the capacity.

When we look at the valuations it is available at 30-40% discount to the book value and when you compare it with similar businesses, on why it's quoting at a discount is that the retail business where it has made a substantial investment was a drag on the overall balance sheet.

There are indications of the improvement in the retail business and if FDI in retail is passed, it could provide some sort of trigger and re-rating for the stock. We have set a target of about Rs 400, over the next 12 months.

Q: You like Aditya Birla Nuvo, what is the story over there and why do you see this upside?

A: Aditya Birla Nuvo is a conglomerate and has got 4-5 different businesses like manufacturing, insurance, telecom, retail and even some component of the IT. We like this stock because most of its businesses are doing extremely well, including manufacturing. Telecom has a substantial investment and has started doing extremely well because of tariff revision.

The retail business could have triggers coming from the FDI retailing and management. In the recent quarters, the overall growth on a consolidated basis was about 28% and very strong net profit growth, however, because of the diversified businesses that it has it is not getting the right kind of valuations. Hence, there is a scope for 20-25% upside in this company.

Q: Take us your other pick V-Guard Industries?

A: V-Guard manufactures cables, stabilizers and other products. It had a dominating position in the Southern markets, but now it is expanding its reach geographically and is expanding its product range as well. The company will be able to show a very strong topline growth of about 25-30%. There were some pressures on the operating profit margin front because of the commodity prices.

However, we think because of the presence that it is increasing, the topline growth will continue to be healthy and once there is stability in the margin the net profit margins will be quite strong at about 12-14%. It is available at 8 kind of next year PE, which looks quite attractive.