With the Diwali festival already upon us, Dipen Shah of Kotak PCG has picked up some midcap and blue chip stocks as picks for the 'Mahurat' trading. From the bluechip space he likes Infosys, ICICI Bank and from the midcaps he likes PNC Infratech, EIL, Allcargo Logistics, Century Plyboard and Supreme Industries.
With regards to Infosys he sees an upside of 10-12 percent from current levels. The past three quarter earnings show that the revival plan is in place and management actions would lead to consistent revenue growth with sustained margins over the next one year or so.
For ICICI Bank, he think the asset quality problems is probably nearing a bottom now. Moreover, the liability franchise is good with about 45 percent CASA, which will lead to improvement going ahead. He also expects the ROA to improve around 1.8 percent next year leading to improvement tin ROE to around 15 percent. Therefore, this makes one of the better picks among the private banking space, says Shah.
From the midcap infra space he would bet on PNC Infratech and Engineers India (EIL) because both the companies boast of a strong balance sheet. PNC Infra has a very good track recovered, which has maintained ROEC of over 25 percent. Moreover, the government's focus on the road sector will lead to order addition.
EIL is clearly a play on hydro-carbon capex spend, says Shah and now with the subsidy burden of most of the refining companies reducing substantially they will have cash on the books to persue their capex and EIL could be the likely beneficiary of that, he adds.
He would bet on All cargo Logistics with an eye on passage of goods services tax (GST). With the passage of the bill this space is likely to see big time traction. He pens earnings of 16-17 percent CAGR and valuations too are inexpensive around 13-14 times next year. One could also look at Century plywood because it is an organised players in plyboard market and the likely passage of GST would bode very well for the stock in terms of demand shifting from the form unorganised players to the organised ones.
The company also has a wide marketing network with 1500 dealers across India. Meanhile on the expectation of growth in the urban expenditure it is likely to post revenues and profits are likely to see a 20-27 percent CAGR growth over the next two years. At current valuations 16-17 times would see an adequate upside going ahead.
Shah is also positive on Supreme Industries. He says the company has a good track record. It produces various products that could benefit from urban spend theme and low crude prices too would keep the raw material costs low, which would help the profit growth for the company.for further details watch video
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