Which midcap stocks merit a buy right now?

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Ketan Karani , VP- Research at Kotak Securities told CNBC-TV18 that he likes midcap stocks like Bartronics , Nesco and Nile . He adds that Nesco can be a multi bagger stock in long term.

 

Karani remains positive on the growth story of Bartronics as they are putting up an 80 million smart card production facility, which will be a huge driver for the company going forward.

 

On Nile Limited, he feels that the performance of the company has been steadily going up and particularly for Q2 and value addition is coming to the company's bottomline in a very big way.

 

Excerpts from the exclusive interview with Ketan Karani:

 

Q: Real estate seems to be the flavour of the season, why do you like Nesco and what is your target on it?

 

A: Real estate seems to be the flavour and it has delivered great returns for the past 2-3 years and we believe going forward as well, real estate would continue to deliver such kind of returns.

 

Nesco is a Bombay based real estate play. The company owns around 72 acres of land at Goregaon, which is a completely free hold land and with the new Maharashtra government policy on IT parks which is a 3 FSI, the company itself is transforming it into an IT- park which is come to on about 94 lakh sq ft of build up space when it builds up totally, with the kind of land prices seen around Bombay, the stock is slated to be a multi-bagger from here onwards.

 

Around 18 months ago on the same channel we had advised this stock around Rs 900 and it is now ex-bonus Rs 2,200, so it has already given five bagger returns but going forward also we believe it can be a multi-bagger stock.

 

Q: Another stock called Nile Limited, a BSE listed stock, Rs 248 is the prevailing price, and it is up about 4% today and just about 5,600 shares done here?

 

A: Nile is a different class of company; it operates in the capital goods space and also into commodity space.

 

It manufactures the glass line reactors and pressure vessels particularly for the pharma industry and is also into processing of lead and lead alloys from waste lead. It has a tie up with Amar Raja for supplying lead.

 

It is uniquely positioned company with very low equity. It is positioned ideally for a take off from here. The performance of the company has been steadily going up and particularly for Q2, i.e. for the September ended results, the company posted an EPS of Rs 13 after paying full tax and for the full year FY07 the company had a Rs 12 EPS.

 

We believe that somewhere down the line, value addition is coming to the company's bottomline in a very big way both from glass line reactors and pressure vessels and lead. We believe that in 2-3 years, Nile will be a multi-bagger.

 

Q: Why do you like Bartronics India, what is your target on that and what would drive growth from here on?

 

A: Bartronics is a unique company, which has, positioned itself over here. They are in a nascent business and they happen to be pioneer in AIDC technology (automatic identification capture device technology). Along with that the company encompasses other technologies like Bar Coding, Biometrics and RFIDs (Radio Frequency Based Identification) of the world.

 

The company is growing very rapidly and they are putting up an 80 million smart card production facility, which will be a huge driver for the company going forward. They are also looking at international acquisition space where it can transform itself into a Rs 1,000 crore company over the next 2-3 years.

 

We believe in the smart card business in a very big way and going forward, this could be a technology adopted not only by our country but also all over the world.

 

We believe it is in the right space but only timing is the issue and how and where it will become big, but there is surety on what it will achieve over a period of time. We remain confident on the growth story of this company and in the next 2-3 years it will be a multi-baggar stock.

 

Disclosures:

 

We would be interested in whatever we discussed today.