S Ranganathan
While the outperformance of US equities has been quite relentless, emerging markets including India have witnessed protracted outflows from foreign portfolio investors (FPIs).
The recent IL&FS fiasco and its adverse fallout on non-banking financial companies (NBFCs) is unlikely to reverse financial savings as a percentage of overall savings in India; it will continue to rise.
We present a few investment opportunities across sectors and market capitalisation from a two-year perspective as they offer a favourable risk-reward ratio for savvy investors.
The recent negative news about the company provides a good entry point into a formidable commercial vehicles player in an industry characterised by entry barriers. Elections in 2019, followed by BS-6 implementation in 2020 augurs well for Ashok Leyland. The industry's shift towards higher tonnage vehicles, coupled with traction seen in defence orders are positive triggers.
Gujarat Alkalies and Chemicals
Favourable demand-supply dynamics led by robust end user demand along with plant closures abroad have led to firm product price cycle for Chlor-Alkali producer GACL having a 15% market share.
Robust free cash flows and strong balance sheet enabled GACL could expand capacities of downstream products like Chloromethanes and Hydrogen Peroxide.
Management change and the recent 40 percent capacity expansion provides the biggest catalyst to this MNC operating in the Rs 20,000 crore Indian stationery market.
The Japanese parent - Kokuyo brings in vast product width across office products, student products and hobby products to capture share from un-organised sector ( dominates stationery market) and wrest advantage in the GST regime.
This small-cap oil and gas producer is now set to witness a smart production ramp-up this fiscal across its oil fields.
Aided by buoyant prices and a debt-free balance sheet Selan Exploration by virtue of its compelling valuations provides a smart way to play the oil and gas theme.
Disclaimer: The author is Head of Research at LKP Securities. The views and investment tips expressed by investment experts/broking houses/rating agencies on Moneycontrol are their own, and not that of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.
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