Real estate stocks have started doing very well lately. You have one real estate stock as your pick right now, Kolte-Patil. Why do you like it and what kind of target can it achieve?
Kolte-Patil is a Pune-based company but it has a strong presence in Mumbai as well as in Bangalore. The company has been working in the real estate sector from 1991 and it has delivered some really prestigious projects. It has successfully delivered more than 50 residential projects, townships and IT parks and has developed more than 20 million square feet of land.
Recently, the Maharashtra government has taken some measures by which the real estate companies got big benefits in their businesses, resulting in higher number of sales in the December quarter for the companies working in Maharashtra. Last Friday, the company announced that the December quarter numbers have been really good. The numbers are a turnaround for the company. The best part is that the company has done the highest ever quarterly collection of nearly around Rs 382 crore, It has been double of last year’s.
The management said that in the December quarter, they have done the highest-ever collection in the history of the company. The net debt to equity ratio has been reduced to just 0.29X and now the company is very excited about FY22. It is a great mid-sized infra company and offers a great opportunity at the current market price of around Rs 257-258. Accumulate the stock with the target price of Rs 330, keeping stop loss at Rs 230 for next three to four months.
Agri-theme based companies have started doing well and is one such company. You like the company. Why do you like it and what kind of targets can it achieve?
VST Tillers manufactures power tillers and diesel engines and is in agricultural equipment in a big way. On 8th February, the company made an announcement about a technical collaboration with Monarch Tractors. Monarch has recently launched a fully electrical smart tractor in the USA in December. This collaboration will be a huge benefit for VST Tillers. It is a debt-free company with a small equity capital of just Rs 9 crore. The Q3 numbers have been really good. Sales grew by 65%, EBITDA increased by 456% and net profit grew by 788%. EBITDA margin has also increased from 4.35% to 14.71%. In nine months, sales grew by 34%, net profit by 264%. The stock on TTM base EPS currently is giving PE of 22X and the tractor sales and other farm equipment are observing huge demand. Accumulate this stock on declines with a stop loss of Rs 1,790 for the target price of Rs 2,400-2,500 in six months.
Engineering the capital good space has also started humming. to normalcy. is a company you like. Why?
Elecon Engineering Company is engaged in the business of designing and manufacturing material handling equipment and industrial gears. Yesterday, the company gave the numbers for the December quarter and at one point of time, back in 2007 and 2008, when the capital goods sector was booming, the stock used to trade at around Rs 340 levels. Today it is available for nearly Rs 50.
The performance of the company has not been good for a long time but from the last two consecutive quarters, the company has been posting really good numbers. Sales grew by 6%, EBITDA by 50%, net profit by 166% and the interest cost has also been deducted by 28%. Overall the numbers posted by the company are really good and the cycle for the segment is changing and so the opportunity is also good. The stock must be accumulated at these levels, keeping stop loss of Rs 44 and target price of Rs 70-75 in the coming six months.
Do you expect a further up move in Nifty or do you think some amount of time correction is not ruled out before any fresh up move can be made?
Post Budget, there has been a non-stop rally and from yesterday, Nifty has started taking a pause. A stock specific approach would be a correct one. Nifty may enter into a consolidation zone between 15,300 and 14,700 on the lower side while 34,000-37,000 will be the consolidation range for the Bank Nifty. In the coming days, one must take the stock-specific approach and go for fundamentally strong stocks. Those who are waiting for the correction may miss such opportunities which the market is ready to give. Till February 15, all the companies will be announcing their earning numbers for the December quarter. In the coming four to five days, focus should be on small cap companies with good fundamentals.
