Which stocks are Annagram Capital bullish on?

5865 Investors following Usha Martin. Share this News with them.

0

Like this story, share it with millions of investors on M3

Which stocks are Annagram Capital bullish on?

Avinash Gorakshakar, research head at Annagram Capital in an interview with CNBC-TV18's Latha Venkatesh gave his views on specific stocks that he is bullish on.

Post your opinion here

 

0

Tweet

Share on Tumblr

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

Avinash Gorakshakar, research head at Annagram Capital in an interview with CNBC-TV18's Latha Venkatesh and Ekta Batra gave his views on specific stocks that he is bullish on.

Below is a verbatim transcript. Also watch the accompanying video.

Q: You have a buy on Usha Martin ?

Usha Martin is one of the largest players in the wire-rod space and typically has a very integrated kind of business model. In fact right from iron ore to the coal mines, its one of the few companies which has managed to actually integrate its business model in a very constructive manner.

Recently the coal mine and the iron ore mine had started since the first quarter of this financial year and the company has invested about Rs 500-600 crore in the last 18 months. Our sense is that most of the expansions benefits are going to be felt in the second half of this financial year. Last year, the company recorded a consolidated bottomline of roughly of about Rs 171 crore on an equity of roughly about Rs 30 crore.

Typically we are very bullish on the company. Our house view on the company is a buy. We have a target price of Rs 125. We expect that this year the company should be recording a bottomline close to roughly about Rs 275-280 crore driven largely by volume and the price increase, which the company will be making. And more importantly since they have an integrated business model we believe that whatever steel price comes to them, it will actually lead to a better contribution to the bottomline. We have a buy on the stock with a target price of Rs 125 for the next 12 months.

Q: Your next pick is Mahindra Forgings . You see a 50% upside on that as well?

Mahindra Forgings is a part of the Mahindra Group. In fact Mahindra and Mahindra own 60% stake in this company. The company had a bad financial last year. In fact they suffered a consolidated loss of roughly of about Rs 180 crore last year largely because their European and US operations actually suffered a big set back considering the kind of volume de-growth seen in these markets.

But if you see this year, I think typically from the first quarter numbers what we have seen is that both Europe and US volumes have picked up. The domestic markets have also shown a good amount of recovery and we like Mahindra and Mahindra typically because it has got the kind of scale and the kind of capacity and the kind of facilities, which normally global customers like.

We are bullish on the company from medium to long term perspective, in fact we believe that whatever traction we have seen in the first quarter the company has reduced its loses around roughly about Rs 79 crore to roughly about Rs 13 crore on a consolidated level.

We believe that further cost cutting and basically better contributions should actually result in positive bottomline numbers in the second half of this financial year. We expect that stock trading at a marketcap to revenue of roughly one time. Our sense is that probably FY11 we could see a revenue of close to Rs 1,700 crore, that means the stock can have a potential to go up to roughly about Rs 165 in about 12 to 18 months timeframe.

Disclosure: We have recommended the above stocks to clients.