ET NowIn an interview with ET Now, Gaurang Shah, VP, Geojit BNP Paribas Financial Services, shares his wealth creation ideas. Excerpts:
ET Now: From slightly longer term view, what is the first stock that you would pick out?
Gaurang Shah: That would be Asian Paints. We believe that this is one of the largest paint manufacturing company operating in three different verticals, which are decorative business, industrial and automotive paints. There has been certain concern in the quarter gone by wherein we saw some volume degrowth in the decorative paint business which is a high-end margin for the company but as we go forward, we believe that it is going to be a thing of past. It has a well diversified manufacturing facilities, 24 manufacturing plants across the globe, nine of them are located in India.
50% of their export business or revenues come in from Middle East, which is a big market. with the steps and initiatives that have been taken by the government in terms of investment capex, affordable housing, smart cities and housing for all, we believe that this is a great time to get into company like Asian Paints.
ET Now: Pharma clearly seems to be a hot sector to be in so which stock would you pick out from that space?
Gaurang Shah: Dishman pharma is the stock. We have been positive on this counter for a very long time. There have been issues with debt but the management has put in sincere effort and try to bring down the debt. It is a positive sign. The other negative was huge capex plans that the company has made.
They are virtually at the last mile of those capex plans and the positivities of these capex will likely trickle in the next couple of quarters and years to come by. Given the kind of performance and the price levels, we believe that with the one year plus time horizon, you can look for a target of about Rs 212, any further improvement in earnings keeping in mind lower debt and of course, capex now being a thing of past, profitable ratios should also improve going forward.
So, if the numbers are something that one should go by and if they are much better than our expectations, then we might revise this target of Rs 212 upwards depending upon the earning season that will unfold.
ET Now: From slightly longer term view, what is the first stock that you would pick out?
Gaurang Shah: That would be Asian Paints. We believe that this is one of the largest paint manufacturing company operating in three different verticals, which are decorative business, industrial and automotive paints. There has been certain concern in the quarter gone by wherein we saw some volume degrowth in the decorative paint business which is a high-end margin for the company but as we go forward, we believe that it is going to be a thing of past. It has a well diversified manufacturing facilities, 24 manufacturing plants across the globe, nine of them are located in India.
50% of their export business or revenues come in from Middle East, which is a big market. with the steps and initiatives that have been taken by the government in terms of investment capex, affordable housing, smart cities and housing for all, we believe that this is a great time to get into company like Asian Paints.
ET Now: Pharma clearly seems to be a hot sector to be in so which stock would you pick out from that space?
Gaurang Shah: Dishman pharma is the stock. We have been positive on this counter for a very long time. There have been issues with debt but the management has put in sincere effort and try to bring down the debt. It is a positive sign. The other negative was huge capex plans that the company has made.
They are virtually at the last mile of those capex plans and the positivities of these capex will likely trickle in the next couple of quarters and years to come by. Given the kind of performance and the price levels, we believe that with the one year plus time horizon, you can look for a target of about Rs 212, any further improvement in earnings keeping in mind lower debt and of course, capex now being a thing of past, profitable ratios should also improve going forward.
So, if the numbers are something that one should go by and if they are much better than our expectations, then we might revise this target of Rs 212 upwards depending upon the earning season that will unfold.
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