Ajit Motwani of Sharekhan picks some smallcap stocks with potential. Motwani likes Ratnamani Metals, WS Industries and Transport Corporation of India.
Excerpts ftom CNBC-TV18's exclusive interview with Ajit Motwani:
Ratnamani Metals:
Ratnamani Metal is a manufacturer of tubes and pipes of stainless steel and carbon steel. These pipes are used in industrial applications, in crude handling industries like refineries and power. Looking at the capex that the refinery industry has lined up, around Rs 85,000 crore in the next 3-4 years, the investment scenario looks positive. ( Also Read: Which high risk stocks will give you high returns? )
The company too is proactively expanding their capacity, almost doubling capacity of both of its segments, stainless steel and carbon steel. It has capex of around Rs 65 crore. The first phase of the capex is already implemented and the next phase is expected to get over by this year end. This is expected to grow the revenues as well as the earnings. ( Also Read:What are Sejal Doshi's favourite picks? )
Based on FY07 earnings, we expect the company to report an EPS of around Rs 46 in FY07 and around Rs 56 in FY08. Based on current valuations at current prices, the stock is trading at around 7.5 times FY07 and 5.5 times FY08.
