We have decided to split the top picks in three different categories; safe sparklers, high risk rockets and value bombs and I have heard that you do not have one, but two in each category that you will advise investors to look at.
I did not know one was enough and that is the reason I said two.Absolutely, more the merrier.
Splitting into three categories is an interesting idea because no two investor is the same. Their risk appetites are not the same. And hence anyone wanting to choose can choose accordingly.
Somebody may want to really play safe. He can play safe or he may like to play with bombs. You can go with bombs. It is like that. My first bet would be ICICI Bank. It is well researched and so I need not talk about fundamentals much, but valuations. Compared to HDFC and Kotak, ICICI is struggling at low valuations and the stock should at least give you Rs 1,100 by next Diwali. So it is a very safe bet among the largecaps. It would be the safest if you buy; no stop loss is required and you can buy as much as you can.
The second bet would be Piramal Pharma. This is definitely a volatile stock, but I am putting it in a safe category because after a long time, after the split happened, the company has shown profits and the management is very clear that here on, things are going to be good. Also their CDMO player should really turn around this year.
So maybe by next Diwali, we will surely not get it at the Rs 118-119 where it is trading right now. I find the stock should at least be Rs 160 at reasonable levels. And yes, you can always have some small stop, maybe at 110 because this is going to be a volatile counter. But yes, I still feel it is a safe bet and as a disclosure, I have it in my personal portfolio.
In the high risk category, my first bet would be Prakash Industries. Now, this is an interesting company which started moving from 50-60 levels, went to 200 and corrected again to 140 and is now trading at around Rs 160-165. This company again should cross Rs 200 levels. There are mining which has been issued to it. And by next year, most of this mine should be operational and companies should start making profits by 2025. As and when we hear the news of those mines getting operational, this stock should slowly and steadily start moving up.
If you look at the market data also, you will find that the promoter himself is very bullish. He is continuously releasing his split shares and also buying in the market as and when there are dips. So Prakash Industries is risky. But yes with a stop loss, you should buy Prakash.
The fourth one the risky one again Indiabulls Housing Finance. Now, many would say as a fundamentalist, I should not touch this stock. But what was it earlier is not the same, except the name. Everything else has changed in the company. The management has changed. In fact, there is a representative of LIC on it right now. I think this company should slowly recover from here.The way the housing market is going, you launch any project, things are really going well. And when stocks like LIC Housing Finance can really move up, this stock should also do well and again go to 220 levels by next Diwali.
Among value picks, again as a disclosure, the first one is RPSG Ventures. I hold it in my personal portfolio. This is one company which holds 50% in First Source Limited available at around Rs 2,000-2,500 crore market cap and the valuation of First Source itself is around Rs 5,500-crore market cap which it holds. Overall, it also holds the ownership of Lucknow Super Giants, the IPL team. In last year’s revenues, the company has almost reached Rs 500 crore. The sports revenue would be big by next year. Next IPL, it can easily reach Rs 750 crore. The stock is really undervalued. You need patience if you buy this. In the last two years, it has not moved anywhere. And it can stay again for two years. But when it moves, it should be a multibagger.
The last one among the value thing is Kalyani Investment Corporation Limited. This is a holding company of Bharat Forge and if you look at the NAV gap, you will find the stock is trading at least at 75-80% discount. I still feel that the stock should at least be 3500 by next Diwali.
So these are the value picks. One really has to be patient with value picks.