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Last Updated : Jan 27, 2015 10:30 AM IST | Source: CNBC-TV18

Here are Prakash Diwan's top trading ideas

Watch the interview of Prakash Diwan of Altamount Capital Management with Latha Venkatesh & Sonia Shenoy on CNBC-TV18, in which he shared his readings and outlook on market and specific stocks.


Watch the interview of Prakash Diwan of Altamount Capital Management with Latha Venkatesh & Sonia Shenoy on CNBC-TV18, in which he shared his readings and outlook on market and specific stocks.


Below is the verbatim transcript of Prakash Diwan's interview with CNBC-TV18.


Indian Hume Pipe Company

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Indian Hume Pipe Company is an old company, been around for a long time but unlike what the name suggests it is no more into pipe manufacturing business. The manufacturing part is just about 20 percent of the company’s business, the rest is into services where they do a lot of water treatment business. It is very similar to VA Tech Wabag but people don’t know much about it because it has been fairly silent about it. It is in a segment that people don’t get used to getting familiar with. However, what is interesting is that the company started bagging a lot of bigger orders as compared to what traditionally it has been doing. So, that has helped the topline grow significantly. I am very sure that the margin improvement will also happen as we go along with their AMC part getting much longer into 7-9 years kind of contracts; that is a lot of money.


Once you set up the plant, you give it to the government they actually don’t have the expertise to manage it and monitor and maintain it. So, that is additional revenue that comes in the form of an annuity which is very visible. So, we are quite bullish, the management is quite bullish. They are kind of been conservative all this while, they have retired some decent quantum of debt, so all the right things in the right environment and I think the company should get re-rated. It is not even valued very steeply at this point in time.

It has still got legs, for last five years it has been in a slumber of sorts on the topline growth and margins were also in single digits. What they are now seeing is that the service business which is the water treatment, that is going to kind of lead the topline growth significantly. It could be three times of what they have done in the past one year and the margin improvement is also going to be backing this up. So, when you look at that historically, 100 percent growth, you might kind of get a bit worried but it could still do about 60-70 percent in the next one year if everything goes off well.



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First Published on Jan 27, 2015 09:34 am
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