Rahul Arora, CEO at Nirmal Bang Instt Equities told CNBC-TV18, "La Opala RG is a very interesting story. I don’t think it is a stock that is covered on the street; it is about USD 100 million marketcap company. It caters to the organised retail on the crockery side. So I happened to make my first purchase of the product only in Diwali this year because we cover the stock. But it is interesting; it is a company that enjoys 30 percent kind of return on capitals (RoCs) and return on equities (RoEs). It is a company that throws up cash."
He further added, "Although it has not caught the fancy of people because probably it is not a very liquid stock and the marketcap is just about USD 100 million. The interesting part about the La Opala is that the addressable market for the company is just Rs 2,000 crore. It does not do anything in steel crockery yet and it is not an end-to-end dinner set provider. So the addressable market for La Opala is Rs 7,000-8,000 crore and right now only Rs 1,000 crore is what it addresses of which 50 percent is organised. So the organised market that it caters to is Rs 500 crore of which its topline is about Rs 150-200 crore."
"I think the scale of expanding across India as it grows its product range is tremendous and that is why I think that stock even though it has done remarkably well, we have seen some institutional activity in the stock over the last couple of months. I think this could be one very interesting stock for retail as well as institutional investors who have a smallcap fund or appetite for smaller stocks," Arora said.
Supreme Industries
He further said, "Supreme Industries is a very interesting play. If you analyse all the product profiles of Supreme, all the verticals that it has, the margin profile is extremely strong, the order book is extremely strong, the management bandwidth is good and very strong return ratios again."
"We are looking at stocks, which enjoy high RoEs, high RoCs, reasonably good corporate governance, companies are throwing up cash and Supreme is one of those stocks that has done well for investors over the years. So probably not at this price but if you get it 20-25 percent lower, it could be a great investment to have," he adds.
"There is one stock that is doing well today is Cadila Healthcare. We are positive on it. In fact, we did meet the management about 15 days back, we came out with the visit note, we upgraded it. That is another one which looks pretty interesting to us on the pharmaceutical space," Arora said.
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