Invest in Elecon Engineering. In two years one could find an appreciation between 50-75% over current market price, says Deven Choksey, MD, KR Choksey Shares and Securities.
Choksey told CNBC-TV18, "I like Elecon Engineering from capital good segment. It is a sub-1,000 crore marketcap company. The growth rate even in this particular challenging time when the projects are going slow in the country has been at moderate level and next year it promises to be on an accelerated pace, we find that this year the company could record a topline of Rs 1,350 crore and I think EBITDA of Rs 200 crore."
He further added, "Going forward next year it could go up to Rs 1,600 crore and EBITDA of somewhere around Rs 230-240 crore. So we basically find that the growth in the company is continuing in this challenging environment."
"The most important part is that they are basically likely to get larger amount of order inflow particularly into the gear division and also into material handling division in this period. They have in the first half of the financial year received a smart order inflow, which is expected to accelerate in the second half of the financial year giving them a visibility of around 1.5-2 years from now onwards as far as the business is concerned."
"We like this particular space more because in quality midcap companies where the valuations are attractive enough in current market price, this is one company which is available at around 9 times price to earning ratio, at the same time on dividend yield parameters if you look at this company in this kind of market one would like to put across dividend yield as a factor because you have the advantage of earning at least 2.4 to 2.5% on dividend yields from this company. So we like this company from an investment perspective and we believe that in two years time of holding this company one could find an appreciation between 50-75% over current market price." Disclosure: It is safe to assume that the stocks discussed have been recommended to clients.
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