Textile, sugar find takers now: PINC Research

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 Financial Tech BSE | NSE 29/05/12 Are Mutual Funds betting on Financial Tech? Other Stocks in this news Hanung Toys and Textiles | 3i Infotech | Jai Balaji Industries | Adani Ports and Special Economic Zone | Syndicate Bank | Sagar Cements | Tata Communications |

Sachin Kasera , Co HD Domestic Equities, PINC Research told CNBC-TV18 that at their recently concluded conference on the midcap space there was a lot of enthusiasm for small and midcaps and across the sectors the mood was very positive. According to him, real estate and infrastructure continue to attract investor interest as they are doing well. He added that there is interest being shown in some contra sectors like textiles and sugar as these could probably give a lot of valuation upside.

Excerpts of CNBC-TV18's exclusive interview with Sachin Kasera:

 

Q: Which were the stocks that won the most favour and what is the mood on midcaps that you found during this conference on the midcap space?

 

A: We had around 42 companies and more than 60 funds participating in the conference. I would say the mood was extremely positive. Across the board there was a lot of enthusiasm for small and midcaps per se and across those sectors the mood was very positive.

 

Q: Which are the sectors within the midcaps space where you think there is more bullishness or was it a very stock specific business model dependent kind of preference that investors had?

 

A: Real estate and infrastructure continue to attract the investor interest in large way because as we know, those sectors are doing well. Apart from that, there are a couple of other sectors like textiles and sugar, which also being contra sectors had some sort off interest coming in from the investors as they probably believe that these sectors could probably give a lot of valuation upside.

 

Q: What's your sense at this point in time in terms of what you may want to pick up from the boarder markets, certain interesting stock ideas that you have been discussing with your clients?

 

A: Among the companies that participated, I would like to basically break them down into three categories. We had some of the largecaps like Financial Technologies , VSNL , Mundra Ports coming in. We are fairly positive in all of them.

 

On the smallcap side we had companies like Sagar Cements , Jai Balaji , Hanung Toys , Phoenix Labs, Rajasthan Spinning. These were the 3-4 ideas, which attracted a lot of investor interest and we are also fairly positive on them.

 

On the midcap side, banks like Syndicate Bank and then there are stocks like First Source, 3i Infotech where we are fairly positive on all of these stocks.

 

Q: Aside of that, another company which seem to pick up favour was Jai Balaji Sponge. Give us an idea of what is the outlook and what were the arguments in favour of it?

 

A: Right now Jai Balaji is basically a mid size steel company. It has a capacity of a million tonne right now. One of the key strengths of this company is that it has the ability to put up steel projects in a very short span of time. They have very good execution capabilities combined with a fact that they are now fully integrated having all the backward linkage in place. The most important thing is that they have been able to set up all this at very competitive cost.

 

Going forward, this company has an ambitious plans of taking their steel capacity from one million tonnes to five million tonnes over the period of next 6-7 years.         

 

Q: The other stock idea that you liked during the conference was Sagar Cements. Given that they are bigger players in the cement space, what is it that you are buying into in terms of a value for this company?

 

A: First of all, while the company is small in terms of size, they are having a significant expansion in terms of their capacity. They have from something like a 0.67 million tonnes right now. The company would be scaling approximately 3 million tonnes next year and that they are doing at almost at the half of the cost at USD 40 per tonne compared to the industry average of USD 80.

 

Their key market, which is the South, continues to see good demand from the industry. We believe that from FY09 onwards, the company should see a substantial ramp up in terms of scale and profitability.