Two broad factors could turn out to be big wealth creators for investors; a) companies with old-style managements turning professional, and b) underestimation of long-term impact of reforms, Porinju Veliyath of Equity Intelligence said in an interview with CNBC-TV18.
The smallcap czar further added the structural migration of the economy from black to white is tremendous. India, in terms of economy, is like a midcap when compared with the rest of the world, and in terms of per capita income as also the market cap, India falls in the smallcap category.
However, with India moving toward equal opportunity for every Indian, it will not remain a smallcap in terms of economy. We will go to midcap and then largecap.
In terms of stock picking, Porinju advises investors to pick stocks which are economy-linked.
Here are excerpts from Porinju Veliyath’s interview with CNBC-TV18:
There is lot of action around specialty Chemicals. Porinju recently picked up stake in Ashapura Minechem. The firm has purchased 7.42 lakh shares (representing 0.85 percent of total paid-up equity) of the company via an open market transaction on November 16.
Equity Intelligence's shareholding in the company increased to 5.35 percent from 4.5 percent earlier. Ashapura Minechem has niche products with revenue of over Rs 1,000 crore. However, it might not be a good buy at current levels after a brief rally that we saw soon after Porinju picked up stake.
Tata Coffee and Tata Global Beverages
Both Tata Coffee and Tata Global Beverages are my important picks and Tata Global is the leader in the country. The consumption story will always click on D-Street. The stock doubled in the last five months.
Future Group companies: Most of the future group companies have done extremely well. Most of them have given about 200 percent return in the year 2017.
Infrastructure sector
If we look at the next 5-10 years infrastructure is one sector which is likely to get a big boost. The market cap of all the companies in the sector it comes to be around dew billion dollars which is too small. This market cap could be 5x-10x from current levels – could be a function of new companies entering the sector.
Logistics
Logistics sector has a long way to go. The market cap of India’s logistics sector is too small.
In the media space, Porinju likes UFO Moviez. Recently, they have decided to merge with Chennai-based Qube Cinema Technologies to solidify its position in the digital cinema distribution and in-cinema advertising spaces.
The business could give about Rs1000 crore turnover and the market cap is 1x revenue. It is a very niche business with the potential to improve further. It is a good stock, but investors need not have to go and buy today.
Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
