Here are a few investment ideas from Prakash Diwan

Now, till there is a challengers who comes and there are not too many on the horizon Bharat Forge will continue to fetch a little bit of a premium even if it comes up with earnings performance which is tepid or below average. But my sense is this pedestrian sense of earnings that we have been seeing since the last few quarters doesn't warrant this kind of a premium. So, there would be divided opinion but I would not buy into it just on the basis of a commentary. I would rather wait to see because most of their projects are long gestation projects. They are doing much better in subsidiaries rather than their standalone business and till those things improve I really don't think just because it is available at a decent valuation post the numbers it would still buy it with the next quarter or two in mind.

Latha: Would that be the same argument on Hero MotoCorp?

A: Hero MotoCorp is a very intersting case study. It is kind of coming up with numbers at a time when you are now looking at the two-wheeler industry to go into a boom phase of sorts. So, the valuations could be very different given the visibility of growth in topline. However, whatever they had, all the good work they started on cost cutting as part of the lead program is kind of getting to ebb now. We saw that till March 2016 but beyond that they haven't had any new plans. But the fact that the industry is looking very promising always keeps some of the contenders in that kind of a zone. And it continues to be a leading market share gainer in this competitive business. So, till Bajaj Auto rally starts challenging them on all the price points, they will continue to hold sway in terms of the market share and that is one of the reasons why they have the pricing ability, they have scalability. But it could go through a little bit of consolidation at best but definitely lot of optimism around the stock.Sonia: One other company that came out with numbers post market hours, SRF, a stock that you have tracked quite a bit. Margins have risen, profits have risen but stock has also risen. So, what would you do?

A: The stock has done a good move; in fact the anti-dumping duty also helped them quite a bit in terms of the sentiment. So, while it might not have moved the needle too much in potential earnings per share (EPS) accretion, the product strength that it has on the chlorofluorocarbon (CFC) area, it is not easy for anybody except maybe Navin Fluorine International which is another challenger but a very small one at that, ends up fetching at a premium, but SRF would start getting re-rated once the full capacity is come into stream and that is sometime post October that you will see that. So, in anticipation of that I expect a lot of buying to come in especially from the institution side, sometime in September or maybe even late August. So, it is definitely a stock that is on a roll, we don't see any way this could kind of soften up because of any kind of earnings expectations.

Anuj: What is the view on Aditya Birla Nuvo now? The value unlocking of course is going on, is it too expensive now?

A: It is a very complex business to assign a value just because some of the businesses have started doing well on unlocking in certain fronts is imminent enough, it does tend to kind of get that discount and you would have to put a discount rationally. So, I believe if you look at some of the newer businesses which they have got into like AB Fashions for instance, if you compare that with an Arvind which is also a brand play and this is also a very strong brand play given the fact that their ABOF vertical is also doing well on the e-commerce side my bet would be more on AB Fashions Limited rather than the parent at this point._PAGEBREAK_Anuj: Do you track 20 Microns?

A: Yes, it is an interesting play, much specialised company. The beauty about this business is if you have production you can actually create an order book out of that because there are enough takers for that product. The only thing is that the quality control levels is so high that it is very difficult to scale up these businesses and that is one of the reasons why if you see the numbers while the profit and all has been very encouraging it is almost like some 60-70 percent kind of a jump. The base is very limited; topline are very muted; muted as a sense the scale is much muted, there is improvement there also, but I would believe that you buy when you get dips, when you want to take it as a multi-bagger in your portfolio at lower levels. It is stretched on the valuations because the exuberance and the illiquid nature of the counter. But otherwise it is a very good business, very promising on a turnaround and definitely could be promising enough even in the next few quarters.

Anuj: Your views on Idea Cellular?

A: Yes, we have discussed when the numbers came. What is interesting is as a strategy they have been focussing more on profitability rather than just sales growth because very clearly they don't want to spend too much energy getting into voice side of the business to grow at a faster rate, in fact one of the successful things that they have done in this quarter is if you interpret the internals is the conversion of voice users into data users. So, there is a migration to 3G, 4G which is very rapid. It is one of the fastest that they have worked towards. The campaigns are working towards that, but they will have to spend on the additional spectrum because this is one area where Bharti Airtel is way ahead of them and Vodafone put together. So, they would end up incurring more than just that Rs 37,000 crore debt which is causing a lot of concern but if the management comes up with some plan on how they are going to do that and at what cost, it could probably start getting a little bit of interest back.

However, it is available at very average valuations. There is nothing stretch about it, you are not overpaying for it. So, that is one of the reasons why you could see some move which is a bit slow but gradual and strong over a period of time.

Sonia: Any thoughts on Lupin. The stock has already moved up from Rs 1,400 to Rs 1,700 between June and now. You have high hopes on the numbers today?

A: The numbers could tend to disappoint you if the expectations are too high. So, I would believe the market is expecting a steady set of number which is a series of quarters that they have had, very good quarters that they have been reporting. So, the repair that you have seen from those lower levels to the current Rs 1,700 is because of the remediation that they have been able to effect. Now, going forward it will come back into what three quarters back the trajectory used to be. So, I am quite positive on the way forward for them. These numbers may not lead to a huge rerating of sorts because the stock is already pricing in that superior quality of earnings but you will have to now of course wait for how things pan out going forward. It is getting into a little bit of a congestion zone from a competitive stand point vis-à-vis some of the larger players in the US. So, they will have to break out of that. But I am quite positive on the numbers and the next couple of quarters but wouldn't be making a buy call at these elevated levels.

Anuj: I want your thoughts on the sugar stocks. Great run, but is it time to book profits?

A: What happens is when you have a change in trajectory for some of these commodities and the cycles are slightly longer, they will tend to take a pause before the next strength comes in. However, my sense is as we get closer to September which is the crushing season, the kind of supplies that could come in because of the inventories that some of these people already are sitting on, would probably mean that you can't take advantage of the shortage in terms of price advantage which is globally very evident. So, that is one of the reason why the profit taking will happen more from a timing perspective but post September I will not be surprised if the resumption of this bull run in the sugar prices continues. So, we could probably wait for that. Profit booking is always going to happen because of the kind of sharp run up and some of the quality names will again - specially the UP based sugar mills will start resurfacing again with some more stronger growth trajectory. Look at the kind of loss to profit turnarounds that most numbers have indicated in sugar companies. So, that trend, if it continues for one of two quarters the sector will get rerated slightly more respectfully.