Two stocks to accumulate over next six months: Rajesh Agarwal, AUM Capital
In a chat with ET Now, Rajesh Agarwal, AUM Capital, says while Bajaj Electricals can be a long-term accumulation as well, in case of Fortis Healthcare, the next six months matter.
Edited excerpts:
The first stock on your radar Bajaj Electricals. Why do you like at the current market price?
After the recent run up which seems to be on the higher side, we feel that this company has a lot of scope left because that it is one of the top four players in the consumer durable space which has a pan-India presence of strong dealer network, almost connected to four lakh retailers.
The best part is the management is looking at a double digit growth of 10% in the consumer durable space and around 20% in the EPC division in the coming year.
They have changed their strategy going forward for their retail distribution from going to the wholesale presence to 100% own distribution channel. Once this process is complete, there would be a marked jump in sales and margins.
Going forward, economic reforms, GST, housing for all, all these bodes well for the consumer durable division. Even the E&P division has witnessed the smart turnaround in FY2016 and we believe that with the kind of order book almost 2580 on the last quarterly numbers we feel there is enough scope for appreciation and not to forget that they are continuing to gather more new orders. We expect the company’s top line to grow by around 10% and bottom line to grow about 22% CAGR in the period of 2016 to 2019 and hence we recommend accumulation in this stock with the target of maybe 385.
What is the next stock on your radar?
Next one is Fortis Healthcare. This is from the healthcare side and it is of India’s leading healthcare operators with a network of around 4000 operational beds across 42 healthcare facilities and the best part is the average revenue per occupied bed is almost Rs 1.37 crore, the best in the industry.
The hospital segment of this company has posted a strong revenue growth of around 16% in the last four years and we believe that going forward also with the growing healthcare spending, owing to growing awareness towards medical insurance and secondly due to the increase in medical tourists from nearby countries such as Bangladesh the entire healthcare space is going to show good numbers and with the kind of facilities this company has, the kind of expansion plans, the best part is they do not want to expand in a new investment, just want to expand in the existing facilities which is where investments are minimal. Even the diagnostic businesses are doing well, the demerger of which is pending, regulatory approvals. Once the demerger is complete the business is going to unlock value. On a SOTP basis, we believe that one can accumulate this stock with a target of maybe Rs 210-220 in the next six months.
Edited excerpts:
The first stock on your radar Bajaj Electricals. Why do you like at the current market price?
After the recent run up which seems to be on the higher side, we feel that this company has a lot of scope left because that it is one of the top four players in the consumer durable space which has a pan-India presence of strong dealer network, almost connected to four lakh retailers.
The best part is the management is looking at a double digit growth of 10% in the consumer durable space and around 20% in the EPC division in the coming year.
They have changed their strategy going forward for their retail distribution from going to the wholesale presence to 100% own distribution channel. Once this process is complete, there would be a marked jump in sales and margins.
Going forward, economic reforms, GST, housing for all, all these bodes well for the consumer durable division. Even the E&P division has witnessed the smart turnaround in FY2016 and we believe that with the kind of order book almost 2580 on the last quarterly numbers we feel there is enough scope for appreciation and not to forget that they are continuing to gather more new orders. We expect the company’s top line to grow by around 10% and bottom line to grow about 22% CAGR in the period of 2016 to 2019 and hence we recommend accumulation in this stock with the target of maybe 385.
What is the next stock on your radar?
Next one is Fortis Healthcare. This is from the healthcare side and it is of India’s leading healthcare operators with a network of around 4000 operational beds across 42 healthcare facilities and the best part is the average revenue per occupied bed is almost Rs 1.37 crore, the best in the industry.
The hospital segment of this company has posted a strong revenue growth of around 16% in the last four years and we believe that going forward also with the growing healthcare spending, owing to growing awareness towards medical insurance and secondly due to the increase in medical tourists from nearby countries such as Bangladesh the entire healthcare space is going to show good numbers and with the kind of facilities this company has, the kind of expansion plans, the best part is they do not want to expand in a new investment, just want to expand in the existing facilities which is where investments are minimal. Even the diagnostic businesses are doing well, the demerger of which is pending, regulatory approvals. Once the demerger is complete the business is going to unlock value. On a SOTP basis, we believe that one can accumulate this stock with a target of maybe Rs 210-220 in the next six months.
