Why Bajaj Corp and Alstom T&D make for good picks: Gaurang Shah, Geojit BNP Paribas

In a chat with ET Now, Gaurang Shah, VP, Geojit BNP Paribas, explains his wealth creation ideas. Edited excerpts

ET Now: Let us chat about Bajaj Corp that is the first stock on your radar.

Gaurang Shah: Yes and this stock has been somewhere under the weather and is one of the leading players in the almond hair oil segment, has got somewhere close to about 60 per cent market share. There has been some negativities in terms of the earnings that we have seen but we expect the demand from urban, semi-urban and rural areas to support going forward from here on and that could increase the top line and bottom line as well. Some time back, it acquired a company called Nomarks. Now this was the second largest anti-mark manufacturing company. It has one-time application but what we have given to understand is Bajaj Corp is re-working on re-launching this particular brand from a one time to all-season application and thereby there could be value creation. Keeping in mind the market share and, of course, the visibility of growth in terms of urban, semi-urban and rural demand, we expect that the earnings to come by will definitely throw in a lot of positivity. From one-year time horizon, we are working with a target of Rs 513. This is a very conservative target from here on. But in case if the numbers are much better than our expectation, then definitely we will revise the target upwards.

ET Now: Alstom T&D is the second stock. What are the target prices that one should watch out for here?

Gaurang Shah: We have a target price of somewhere close to about Rs 485 on Alstom T&D stock and it is trading close to near about its 52-week low. Given the kind of underperformance on capital goods and engineering space, it is not surprising to see this kind of levels but we are quite optimistic on the various verticals that Alstom T&D is present in. For example, they are presented in power generation, power transmission and rail infrastructure. Now rail infrastructure is going to throw in a lot of positivity and this particular company happens to have a very sizable presence in this particular business vertical.

Add to it, the capex and of course the demand for power transmission and distribution for the additional capacities is likely to come up with the focus of the government on 24x7 power supply. So we expect that earnings to improve. The only problem is that over here you should have at least a year and a half to a kind of time horizon, given the kind of time needed to kick off growth in capex as well as acquiring orders from the government and executing these. But earnings are likely to improve going forward from here-on on fall back of all these triggers.