Stocks to look at in the midcap space: Chheda

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

Pritish Chheda of SSKI & Sharekhan likes stocks like Godrej Consumer Products , Aditya Birla Nuvo and TIL in the midcap space.

For Godrej Consumer Products, he sees 30-35% gains in future. Chheda believes that Aditya Birla Nuvo is a diversified company. In TIL, Chheda is expecting close to about Rs 17-Rs 18 crore of earnings.

Excerpts from CNBC-TV18's exclusive interview with Pritesh Chheda:

Q: What kind of gains do you see in Godrej Consumer Products?

A: I see close to about 30-35% gains in that stock in future, because of the robust growth that we have factored for Godrej Consumer Products. We are looking at about 25% earnings growth over the next three years for the company.

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Q: What is going to be kicker for its earnings?

A: The company is into two businesses. One business is of soaps and the second is of personal care products. The personal care segment contributes 35% to the revenue of the company. This will be the main business for the company. Within this business, the company is into products like hair colours. Hair colours have seen a good growth over the last couple of years and there has been a trend of using this all over India.

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Q: Does this company own any real estate?

A: I do not think that there is any real estate in this particular stock, maybe it is there in other Godrej Group companies.

Q: Why do you like Aditya Birla Nuvo?

A: Aditya Birla is a diversified company. If one looks at it from an earnings multiple point of view, then it will be a right method. But when one runs through its business; it is in garments, telecom and insurance businesses. If one wants to play the consumer-spending story, then that is where telecom and garments come into the picture.

If one wants to play on basic financial policy-related story, then he can play on the company's AMC and insurance business.

Q: Demerger is the tune of the day. Are you playing this because you are expecting a potential demerger?

A: I am not playing on a potential demerger, because if you look at Aditya Birla Nuvo; then for the last 10 years, it has always been a conglomerate. With the recent merger of Birla Global Finance and the fertiliser business with the company, I do not think that a demerger story exists here.

Q: TIL-what earnings are you looking at for this company?

A: In this company, we are expecting close to about Rs 17-Rs 18 crore of earnings, and that is approximately Rs 23-Rs 24 EPS for the company. They are into earth moving or construction equipment business and material handling business.

In construction equipment segment, the company distributes an entire range of caterpillar equipment in India, and this business is growing at 25-30%. With the current infrastructure plan of India, I think that this particular segment should grow at a phenomenal rate and it is available at about 9 -10 times FY07. Whereas comparable companies are available at 15 times.

Q: What is your price target for this stock?

A: My price target is closer to Rs 225-Rs 230, but that is at 10 multiple.