Enter Talbros Automotive on dips, says Prakash Diwan

Prakash Diwan of Altamount Capital Management told CNBC-TV18, "The markets have been giving a lot of opportunity for people who have thought that they missed out because of the higher valuations. However surprisingly the ability to enter atlower levels also seems to be missing with most retail investor but our endeavor is to point out the ones that make sense."

"From the auto side, I have slected Talbros Automotive Components and I believe that is the story which is still kind of intact. It is a market leader and it shows a category of gaskets. What has happened is last couple of years because of environmental concerns, asbestos free gaskets are the norm and they have been priced higher than the rest and this company is actually converted itself into 100 asbestos free operation. It is basically something which is very progressive and gives them pricing power, gives them acceptance through lot of international markets particularly Europe," he said.

"They diversified from gaskets into other things related to suspension systems, forgings and not just dependant on one particular area. They had very good tie-up and collaboration with three Japanese companies and diversified the product mix. It is a story like Motherson Sumi Systems, very clearly getting into exports in a gradual but very definitive way."

"They have not gone into acquisition because it is a very small company at this point in time. My sense is that the way it has traded at above 5.5 times FY16 for a market leader and historically it has been into 8-9 kind of a band one year forward. So there is a huge arbitrage in terms of a re-rating. In terms of a growth rate the management has been talking about going forward is phenomenal. Any dip would be a great idea to, in fact it moved from recent high to Rs 140 levels recently. That is the time you can start accumulating. Every dip in a market like this is a great opportunity to get these kind of companies in your portfolio."