Two long-term stock picks that will help you make money: Gaurang Shah

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

Edited excerpts:

What is your first wealth creation idea in this volatile market?

We have identified two stocks for long-term investment keeping in mind the recent correction. One is from the pharma other one is from the private sector banking.

From the pharma pack looking at the recent correction and downside, we have identified Natco Pharma. This particular company specialises in oncology and gets almost about 35% to 40% revenue from the oncology business.

The markets for its products are Canada, US, Europe. It has total of about six manufacturing facilities and the recent correction has opened up tremendous opportunity in terms of long term investment in Natco Pharma.

We have a target of somewhere close to about Rs 680 on Natco Pharma. A little bit concern from the entire US, UK domestic drug regulators is an overhang on the pharma pack but we do not see any strong headwinds for Natco Pharma. Use this current downtick to invest in Natco Pharma from a long term point of view with a target of Rs 680.

ICICI Bank is the second stock that you like. Why is this a good investment idea?

We have seen correction in almost all bank stocks whether public or private due to one reason or other. We believe that the numbers over the last two or three quarters are very encouraging for ICICI Bank, one of the leading private sector banks with a sizable presence in terms of its branch network and ATMs. There is a possibility of a rate cut, at least one rate cut by 31st March, 2017 that is what we anticipate and that could possibly have a positive impact on the entire banking sector and the financial equity market.

At the current valuation, where the bank is trading, the downside risk is extremely protected and of course given the kind of opportunity in terms of corporate, retail, consumer loan book growth, this bank could be one of the greatest beneficiary along with the other banks as well. But given the price correction, it is a great opportunity to buy into ICICI Bank.

From a long term point of view, we have a target of Rs 340 and we are quite optimistic that the balance sheet issues with respect to the provisioning, GNPL etc are going to be dealt with some stringent steps and measures that the management has already been vocal about and our sense is that there could be recovery around the corner.