Mid-cap stocks with safety and growth
A cursory glance at the list of top ten stocks to buy now is sufficient to show that the wizards at Karvy have carefully applied their minds and cherry-picked only those stocks which offer the perfect balance of growth and safety.
Let’s take a quick look at the top-ten stocks:
|Value Invest March 2017 – Top 10 Mid Cap Stocks|
Target Price (Rs.)
Let’s discuss a few of the stocks that we are familiar with:
GHCL was regarded as such a junkyard stock at one point of time (March 2016) that Mudar Patherya admitted that he was taking the risk of recommending the stock knowing that readers would “reflexively flip the page”.
However, such is the visionary capability of Mudar Patherya that he proceeded to provide a masterful analysis as to why the manufacturer of soda ash and textiles deserved to be bought.
Mudar has been vindicated in his conviction because GHCL has surged from Rs. 108 to Rs. 269, posting hefty gains of 145% in just 12 months.
Sanjoy Bhattacharyya, the doyen amongst value investors, and Ashish Kacholia were also quick to recognize the potential of GHCL. They pocketed large quantities of the stock when it was going a-begging.
Several other illustrious investors such as IndiaNivesh Securities, EOS Multi Strategy Fund and Morgan Stanley have joined the list of shareholders.
Karvy’s logic for recommending a buy of GHCL is simple yet convincing. It has pointed out that GHCL has made capex additions which will drive growth across all segments and that there is a diversified business portfolio which will support overall growth. It is also emphasized that there are “high entry barriers” and that there is a “marquee customer base”. There is also a reference to the robust balance sheet and high return ratios of the company.
Indo Count Industries
Indo Count Industries is also familiar to us because Ashish Kacholia holds a dominant shareholding of 24,95,760 shares in it as of 31st December 2016.
Indo Count has been flat on a YoY basis which implies that it may be silently plotting a come back.
It is worth recalling that IDBI Capital has recently issued a research report on the home furnishing sector in which cogent reasons have been given as to why the huge demand expected from offshore will create prosperity for the sector.
IDBI Capital has also recommended a buy of Indo Count Industries with a target price of Rs. 218 per share (35% upside).
Karvy’s logic is on similar lines. It has also emphasized that the home textile segment will be the key growth driver and that massive demand from international markets will fuel the prosperity of the Company.
Mudar Patherya had once described Jain Irrigation as an “awe generating company”.
Unfortunately, things did not go as per plan and the stock was condemned as a “fallen angel”.
Thereafter, Jain Irrigation received a new lease of life when Ambareesh Baliga recommended it as his “best pick for 2016”.
Fortunately, the stock has lived upto Ambareesh Baliga’s expectation by notching up hefty gains of 44% since his recommendation.
Karvy has now given the green signal to Jain Irrigation. The logic is that the Government’s thrust on irrigation and housing will create growth enabling environment and that the Company is well poised to take advantage of it.
Navin Fluorine is yet another stock that is familiar because two stalwarts, Ashish Kacholia and Rahul Saraogi of Atyant Capital, call the shots in it.
We saw how the duo bought the stock when it was languishing unwanted and nursed it to multibagger status.
I reported earlier that Navin Fluorine is now in the “big league” after collaboration with Honeywell, the American Behemoth.
Karvy has endorsed this by stating that the robust diversified portfolio and high margin business strategy of Navin Fluorine will drive growth. It is also pointed out that the innovation and strong domestic footprint of the company will be its major growth drivers.
Trident Ltd needs no introduction to us given that it is Dolly Khanna’s favourite stock.
We recently had the pleasure of inspecting the stock’s innards to determine what makes it tick and why Dolly took a fancy for it.
Not surprisingly, Trident Ltd has now become the hot favourite amongst expert stock pickers. I have collated the research reports of IDBI Capital, Ventura Securities, CRISIL, HDFC Securities, Dynamic Levels and Sanjiv Bhasin of IIFL on why Trident Ltd is a must buy now.
Karvy has endorsed these recommendations by pointing out that Trident Ltd is one of the largest integrated home textile players in the World and that the increased capacity utilization in the towel and bed linen segment coupled with the completion of capex, rise in cash flows and lowering of debt augers well for the Company.
The other five stocks recommended by Karvy are of equally top caliber. Karvy has also thoughtfully provided a technical analysis of each stock to demonstrate that the stocks are in a “secular upward trend” and are likely to effortlessly coast to higher levels!