Add SKS Microfinance, CCL Products on dips: Rahul Arora

Rahul Arora of Nirmal Bang Institutional Equities told CNBC-TV18, "SKS Microfinance is a very well held stock, it is not surprising that it saw the kind of fall. However, when you are looking at its business and when you are looking at huge under penetration of microfinance in this country and if you read the recent reports that have come out from regulators of microfinance, I do not see why this company should not be growing at 40 percent. It is a company that has 25 percent return on equity (RoE) and 5 percent return on assets (RaA); private sector banks do not give that. I do not know why you would want to sell this stock. The correction is giving you very good opportunity to enter, the return ratios are strong, the earnings profile is strong and as per our calculation the penetration is probably in the low double digits. So there is a huge scope for SKS Microfinance to grow.""In CCL Products India, I wouldn't be tempted to book profits because the stock has come back from Rs 250 to Rs 210 and if anything I would look is to add because it is giving a correction and it has been such a phenomenal story that we keep telling our clients. It is not a commodity company because it doesn't have the plantation risk like Mcleod Russel (India) does. It is a simple converter. If I look at the EBITDA per kg over the last ten years regardless of what is happening with coffee prices, EBITDA per kg has gone up again despite the run it had at Rs 250, it was going at 15x," he said."It has come off a lot more, a 25 percent RoE company, you will find this common thread in most of the stocks that we cover. We only look at stocks that will be 20-25 percent RoE which are cash flow generating. This company will give you close to Rs 250 crore of cash flow in the next two years. It is an industry leader. We love companies that are industry leaders as you would remember Colgate Palmolive and Procter and Gamble Hygiene and Health Care (P&G).""Any dip that you get, buy into CCL Products and if you are ready to hold on to this company and if it gets the fast moving consumer goods (FMCG) valuations, someday somebody could come and say this deserves 20 PE from 13-14 PE that it is today. Both on dips should definitely be looked at in terms of adding," he added.