Amar Ambani gave a talk on CNBC TV-18 where he explained the merits of a few of his stock picks.
Bharat Forge has a diversified business, stronger balance sheet and better production efficiency. Its’ capacity utilization rates are below 55%. An increase in utilisation would translate into earnings CAGR of 28% over FY14‐17E led by benefits of operating leverage.
L. G. Balkrishnan:
Though this stock has already given a return of 400%+ in just one year, there is much more to go.
Amar advised investors not to be wary of the steep jump that the stock has witnessed in the recent past. He explained that when a stock makes the transition from small-cap to mid-cap or from mid-cap to large-cap, such surges are seen. It is futile to wait for a correction in such stocks, he added.
Instead of buying two wheeler stocks like Hero Motor or TVS, it is better to buy LG Balakrishnan, as it supplies products to the OEMs. The company will also benefit from the replacement market and export growth.
The valuation at 7.4x FY16E EPS is reasonable given the robust cash flows, clean balance sheet and expected 3‐year earnings CAGR of 23%.
The other stocks that he talked about were Dhanuka Agritech & IndiaBulls Housing Finance.