Buy Pipavav Shipyard at lower levels: Choksey

Buy Pipavav Shipyard at lower levels, says Deven Choksey, MD, KR Choksey Securities.

Choksey told CNBC-TV18, "As far as Mazgaon Dock tie-up is concerned long-term certainly I think it looks very positive because this particular kind of a tie up is giving a lot of clarity for the business for Pipavav from the volume side. So one could possibly expect few things out of this particular tie up that the kind of business which they will be executing on defense side could carry probably little higher margin compared to what they a have been carrying in single digit at this point of time which could jump up to double digit which is a good possibility."
He further added, "The second possibility is that return on networth, which is quite low for infrastructure company could possibly go up going forward, may not be as much as you see in the port business but certainly you get a better return than what they are commanding in single digit even at this point of time. So some of the positives are already there into this stock but they are not going to happen in a shorter period of time. As I see it I think for this business to give rewards it would take at least 12-24 months in which you would see some amount of business happening and probably bottomline gets reflected."
"Currently I think probably the stock is a little expensive though it holds potential it trades expensive. Maybe one could take a look at this stock when it is closer to execution of the business which is few quarters down the line. Probably that could be a good opportunity to buy if market gives the opportunity at lower levels."