Buy HIL, says PN Vijay

Buy HIL, says PN Vijay, Portfolio Manager.

Vijay told CNBC-TV18, "Hyderabad Industries (HIL) is a very old company, more than 60 years old. It is based in Hyderabad. It is a flagship company of the CK Birla Group actually. They are a leader in the fibre cement business which is popularly known as asbestos and they account for about 20 percent of the market share Everest, Visaka and others being the other players."
He further added, "Their brand is Charminar and fibre cement accounts for about 80 percent of their business though they have been diversifying into other building solutions. There is a huge demand for this product from the government for rural housing; it is amazing the type of growth rates in investment in rural housing and also in warehousing. So, these are the two areas where there is large demand for this product."
"This is been a consistently growing company, they have had a growth of more than 20 percent year after year, a high dividend paying cash rich company. There is basically one large risk that the government bans use of asbestos as many developed economies have done. India has not done that for a long time, what India has done is to ban the fibre which you use to make this product because it’s carcinogenic. So, the company is importing that fibre from country which still produce it."
"Side by side the company is also using a product developed by Reliance, a petrochemical substitute which about 25-30 percent of it has replaced the natural fibre. So, over time it will become environment friendly. The second thing they are doing is they are strong market presence, their strong brand they are diversifying into other building solutions, products. So, it is a very stable and strong company. The stock is quoting around Rs 490-495 and I recommend a buy, it is a very safe buy with a target of about Rs 630 in the next 12-15 months." Disclosure: No personal holding but the stock may have been recommended to clients.