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Last Updated : Oct 20, 2016 11:14 AM IST | Source: CNBC-TV18

Here are Aashish Tater's top trading ideas

In an interview to CNBC-TV18 Aashish Tater of fortunewizard.com shared his reading and outlook on fundamental side of the market, specific stocks and sectors.

In an interview to CNBC-TV18 Aashish Tater of fortunewizard.com shared his reading and outlook on fundamental side of the market, specific stocks and sectors.

Below is the transcript of Aashish Tater’s interview to Sonia Shenoy and Latha Venkatesh on CNBC-TV18.

Sonia: We had a good showing from names like Hindustan Zinc, KPIT Technologies, RBL Bank. Anything from the lot that came in post market hours yesterday that you liked?

A: In fact, Hindustan Zinc has been our top pick for almost two years and we continue to abide by it where we feel this is one stock, which is a portfolio bet for 20 percent plus compounded annual growth rate (CAGR) story.

Now if you see this dividend announcement, this is an icing on the cake, exactly what we have to quote if we have to quote it, because Rs 288 is our fair value target for the stock. The stock has seen a good, beautiful run up from August, September, October zone from Rs 203 to Rs 250 odd levels. So, we feel that today could be a profit booking day around Rs 255-258 odd mark. But anytime you get an entry point around Rs 240-242 odd zone, this will be again a very good entry point for the stock.

On the other hand, if you see KPIT, it will have a huge short-covering because expectations were muted, management have been cutting guidance and then they come up with a growth. So that is a positive. Anytime you see that Rs 146-148 odd mark, we would advise you to exit from this particular stock despite good numbers versus the expectation.

On the other hand, if you see RBL Bank, I am not comfortable in buying RBL Bank at current levels because there are other opportunities available. So, I do not know a new kid on the block should trade at three times plus price to book value. And even if I see all the high growth or potential this stock carries, this can be a hold, but not a very good buy at current levels. Though we expect that Rs 330-340 is in the offing, it does not qualify as a candidate to buy. It is just a hold.

Latha: NBCC, the offer for sale (OFS) will be done, any views on that stock? With that overhang gone, should one buy?

A: The answer is definitely, no for the qualified institutional placement (QIP) because LIC would be subscribing again to safeguard this thing. There will be a flush of paper coming in approximately Rs 2,200 crore. So, what will happen is there will be ample liquidity into the system. Every time it will now go to Rs 260-270, it will see a lot of selling pressure.

The problem with public sector undertaking (PSU) right now is that quality stocks will have paper supply, the poor stocks no one is ready to buy. So, you will get it at much cheaper rate. Maybe 6-7 percent in the next 7-8 days close to that Rs 220-230 odd mark where it qualifies as a buy.

Fundamentally, nothing changes for this particular stock. In fact, if you see, the announcement with Tata Communications-VSNL land deal, we think this is a major player that will get benefitted because of the development. Same with the MTNL land bank. Whenever it happens, this will qualify as the best player to develop such lands.

But still we feel because over supply of paper and LIC going to act as a safeguard, we do not see any value creation for the stock in the short-term to medium-term. Overall we remain positive, but it is an avoid at current levels and even 5-6 percent lesser. If it comes to around Rs 220 odd levels, you can qualify it as a buy.

Latha: Why do you not give us one of your own multi-bagger ideas? Anything you are spotting for value?

A: Liquor stocks will be in flavour despite people having negative view on largecaps like United Spirits. We feel Radico Khaitan could be a potential multi-bagger from current levels. Now, we had downgraded the stock in 2014 when everyone was gung ho on Suntory taking over Radico Khaitan then because we felt that there were so many related party transactions that will keep a hurdle on this stock and thus valuations will not be acceptable to Suntory.

Now, what has happened in the last two years, if you see, there is a beautiful pattern where the stock has consolidated and now is giving fresh breakout. In the same time, the balance sheet has cleaned up. The related party transactions have fallen to almost negligible levels. So, from 2013, almost related party transactions have been reduced to zero level. This is fine that either a joint venture is in the offing or a takeover potential for this particular stock.

Now, what has happened is the debt has reduced substantially. The raw material prices for Radico Khaitan the extra neutral alcohol (ENA), the alcohol, they will increase the margin by 200 basis point and the stock will do an earnings per share (EPS) of over Rs 8 for the next fiscal. We think this is one growth story that one can be looked upon. We are having a very conservative target of Rs 210 if no deal happens with any of the players, but going by the way, because we track open offer deals and everything, we think this balance sheet clean up has happened only to instigate the deal. And that is why we feel this is one stock which is a potential multi-bagger. So, when we picked in FY14 as a multi-bagger for McDowell’s at Rs 600 and we said that Rs 1,440 will be the first target and Rs 2,500 or Rs 3,000 we will see after the deal goes through. So similar patterns are visible in Radico Khaitan.

So, we feel downside is protected with 8-10 percent downside. You can take a risk for first target of Rs 210 which is approximately 50 percent upside from current levels. Plus December and January will be very good for this particular kind of stories. In fact, I expect a huge consolidation globally into this particular space and that will rerate the entire sector.

This is one stock which is available at an enterprise value to sales of 2.5 times. This is available at very mouth watering levels given two or three of its brands are well recognised in the canteen stores department (CSD) stores. In specific 8 PM and After Dark whiskey, we did that test and we found it that this is one recognisable brand amongst users. So, this is one area where we feel has got tremendous potential going forward.
First Published on Oct 20, 2016 09:13 am
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