ET NowET Now caught up with Devang Mehta of Anand Rathi Financial Services for his outlook on some sectors and stocks. Excerpts:
ET Now: Which is the next TVS Srichakra?
Devang Mehta: Right now, probably the market is hunting for such stocks. There are a lot of such ideas. We do not know if these would emulate TVS Srichakra and become multi-baggers, but they could probably give you 50% to 80% return in a year’s time.
Some stocks that immediately come to my mind are Sundram Fasteners and Igarashi Motors. Both these companies belong to the auto component or the auto ancillary universe, which has been cyclically doing very well on the back of good demand. These two, along with Kalyani Steel and others, could give you 40% to 60% type of returns.
Another stock, again from the same space, would be Atul Auto. It is into the production of three-wheelers. Their capacity is going to double in the next two to three years. It will do well.
ET Now: Anything else that is looking interesting from the small or the midcap pharma end?
Devang Mehta: One stock that we like from the pharma universe is Granules. The company’s earnings growth has been triggering very well. It is in a growth phase. But it is not on the radar of most people. Granules would be one stock we would bet our money on in the midcap pharma space.
ET Now: What is the PE multiple for Granules, and what makes you bullish on Granules?
Devang Mehta: The PE multiple for it would be around 17-18 times one-year forward. But the more important thing is that the company is slowly but surely growing and it has not seen the sort of a dream run that other pharma companies have seen.
We feel there is substantial upside for them from here on. Their results have been very good, and the export demand being excellent.
ET Now: Lots of people are beginning to talk about the road sector. What is your sense on the road players? Anything interesting here?
Devang Mehta: You need to be very selective over here. The largest stock pick that would come to the mind is L&T. It is going to get the benefit of infra as well as the capital goods cycle turning. NCC is our top pick in the mid or small cap basket for infrastructure.
We do not like stocks like IVRCL for the time being. We feel there is still a lot of pain for them for another six months. But given the business model that NCC has at the current juncture, we feel it is about to be rerated. We see about 30% to 40% upside for NCC going forward.
ET Now: Which is the next TVS Srichakra?
Devang Mehta: Right now, probably the market is hunting for such stocks. There are a lot of such ideas. We do not know if these would emulate TVS Srichakra and become multi-baggers, but they could probably give you 50% to 80% return in a year’s time.
Some stocks that immediately come to my mind are Sundram Fasteners and Igarashi Motors. Both these companies belong to the auto component or the auto ancillary universe, which has been cyclically doing very well on the back of good demand. These two, along with Kalyani Steel and others, could give you 40% to 60% type of returns.
Another stock, again from the same space, would be Atul Auto. It is into the production of three-wheelers. Their capacity is going to double in the next two to three years. It will do well.
ET Now: Anything else that is looking interesting from the small or the midcap pharma end?
Devang Mehta: One stock that we like from the pharma universe is Granules. The company’s earnings growth has been triggering very well. It is in a growth phase. But it is not on the radar of most people. Granules would be one stock we would bet our money on in the midcap pharma space.
ET Now: What is the PE multiple for Granules, and what makes you bullish on Granules?
Devang Mehta: The PE multiple for it would be around 17-18 times one-year forward. But the more important thing is that the company is slowly but surely growing and it has not seen the sort of a dream run that other pharma companies have seen.
We feel there is substantial upside for them from here on. Their results have been very good, and the export demand being excellent.
ET Now: Lots of people are beginning to talk about the road sector. What is your sense on the road players? Anything interesting here?
Devang Mehta: You need to be very selective over here. The largest stock pick that would come to the mind is L&T. It is going to get the benefit of infra as well as the capital goods cycle turning. NCC is our top pick in the mid or small cap basket for infrastructure.
We do not like stocks like IVRCL for the time being. We feel there is still a lot of pain for them for another six months. But given the business model that NCC has at the current juncture, we feel it is about to be rerated. We see about 30% to 40% upside for NCC going forward.
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