Expert picks: Four wealth-creating ideas to grab as the stock market takes a tumble

NEW DELHI: The domestic equity market has made a shaky start to the week with the benchmark indices already shedding close to 3 per cent so far over Monday and Tuesday.

The S&P BSE Sensex has lost a per cent while the broader barometer Nifty50 is down 1.01 per cent in trade on Tuesday, as widespread selloff in global equities took its toll on the market.

“We have not found a firm ground yet, which means volatility is all around and we are in the midst of the results season. So the way to approach this whole thing is to see how things pan out in the entire results season, and of course, some of the global events all around. It is a classic wait and watch in that sense,” said Sachin Shah of Emkay Investment Managers.

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Shah sees the current stocks correction as an opportunity to “selectively invest” and believes that this is a good time where you can do some stock-selection and pick up the businesses you like.

Other experts have also suggested a stock selection approach to investors in separate notes to their clients. Here are four such wealth creation ideas for investors, who have an investment horizon of at least 12 months.

Gaurang Shah, VP, Geojit BNP Paribas Financial Services

Kotak Mahindra Bank (Rating: Buy/ target price Rs 790): The merger of ING Vysya created a little bit of concern for some time, but post that, positives have emerged in the numbers of the bank.

“We believe with the kind of gamut in the reach and the financial product that Kotak Mahindra has and, of course, given our view that we will possibly see a revival of the banking sector in the second half of the calendar year 2016, we will possibly see the private sector banks take a lead in that revival. At current valuations, the downside is protected. We believe with the positives and, of course, the rate cuts which have happened last year and which are likely to come through, we could possibly buy at a target of Rs 790, a very conservative target,” Shah said.

Godrej Consumer Products (Rating: Buy/target price Rs 1,450): GCPL has given great numbers and a fantastic outlook going forward. Acquisition in the overseas market is only growing to increase their presence and a great amount of product line up and launches with an equal amount of consumer confidence in the product that Godrej Consumer Product sells.

“The numbers were great and with this acquisition, there is a possibility of cross-border sales, thereby, improving the visibility of the numbers in quarters to come. On Godrej Consumer Products with the one year plus time horizon, we are standing with the target of Rs 1,450,” the analyst said.

G Chokkalingam, Equinomics Research

KCP (Rating: Buy/target price Rs 100): “We have picked the stock for two reasons. One, its sugar business in Vietnam is doing well and the company has got government permission to increase their capacity from 6000 tonnes of cane per day (tcd) to 10,000 tcd which will provide a profit of around Rs 58 crore, in itself. Second, the cement business has got all possible sources of power. It has got three mini idle power plant, wind energy, solar energy, thermal plant and a recovery system to generate power. That is why in September quarter the segment profit from cement business tripled and the company is giving dividends since its inception,” said Chokkalingam.

“All this augurs well for the company, and I am very confident that in the short to medium term it can go back to Rs 100 easily and in two to three years it can become a multi bagger,” he said.

Anand Rathi Institutional Research

Gabriel India (Rating: Buy/target price Rs 100): With the continuous debt reduction, simplification and automation, efficiency is likely to improve. The company has created a strategic business unit for each of its segments in order to focus on product mix, exports and the after-market expansion.

“To boost growth, Gabriel is looking at widening its customer and product bases, and tapping export markets more insistently. We maintain Buy on the stock, with a price target of Rs 105 (earlier Rs 109. On account of being debt free, and having a strong free cash flow (FCF) we are valuing Gabriel at 14 times FY18 EPS,” the brokerage said.