Daljeet is a staunch believer in the principle that one must invest funds only in stocks which have top-quality management and a sound business model. These are classic ‘buy and forget’ stocks that can be trusted to compound gains slowly and steadily and become multibaggers by sheer passage of time.
JB Chemicals
JB Chemicals is one of Daljeet Kohli’s all-time favourite stocks. He first recommended the stock in December 2013 on the basis that the new pricing policy would benefit JB Chemical’s margins and that it will report healthy growth in exports business & domestic business going forward.
This prediction has come true. JB Chemicals has grown by leaps and bounds and the stock price has kept pace. The stock has surged from Rs. 110 to Rs. 376, resulting in fabulous gains of 217%.
It is notable that these hefty gains have come with absolutely no risk to the investors’ capital because JB Chem is, owing to its debt-free status, huge cash balance and established business, in a fail-proof status.
JB Chem is on the cusp of re-rating
Daljeet has reiterated a buy on the basis that the “stock is on the cusp of re-rating on back of US business”. The logic is as follows:
“This is second consecutive quarter of margin expansion with EBITDA margin firmly moving to 20% range from 16% range in previous years. Despite challenging environment on export markets JBCL has been maintaining marginal growth implying the strength of its product portfolio. We believe in near future as currency related issues in many of the EMs recede, JBCL will be back on better growth trajectory. Meantime the company has been steadily moving strengthening its DF franchisee as well as developing a few products for US markets. We believe the efforts on US front should start yielding results in next 1-2 quarters. Visibility on US shall be next trigger for stock re-rating. We remain positive on JBCL & maintain buy rating on the stock with upward revised target price of Rs 413 (15xFY18E EPS, unchanged). At CMP of Rs 337, the stock is trading at attractive valuation of 13.3x FY17E EPS of Rs25.3 &12.2.x FY18E EPS of Rs 27.50.”
CD Equisearch also recommends JB Chem
CD Equisearch has recommended a buy of JB Chemicals on the basis that the stock is presently quoting at reasonable valuations of 18.3x FY17e EPS of Rs. 18.73 and 15x FY18e EPS of 22.81 and has a strong liquidity position of Rs 392 crs ($ 58.6m). CD has also pointed out that there has been revenue growth and margin expansion in the last few quarters which has increased FY17e EPS estimate to Rs 18.73 vs. Rs. 15.35 earlier.
JB Chemicals is also favourite of G Chokkalingam
G Chokkalingam, the well-known value investor, is also known to be bullish about JB Chemicals. He recommended the stock in January 2015 when it was languishing at Rs. 184 and promised a target price of Rs. 256 which has been effortlessly breached. Recently, when the stock corrected despite good quarterly results, G Chokkalingam recommended investors to buy the stock “aggressively” on the basis that there is a “lot of comfort” in the balance sheet of the company.
L&T Finance Holdings
L&T Finance Holdings is yet another blue-chip mid-cap NBFC stock that is “safe as a house”. The pedigree of the promoter ensures that our money is safe and sound and that the stock will continue to compound slowly and steadily without requiring any supervision from us.
On a YoY basis, L&T Finance Holdings has given a return of 39%. While the return is hefty, it has underperformed its peers like Capital First and Bajaj Finance which have given a YoY return of 86% and 112% respectively.
Incidentally, both Capital First and Bajaj Finance have also been recommended by Daljeet Kohli in the past when they were languishing at low valuations.
Daljeet has promised that “re-rating is on the cards” for L&T Finance Holdings and that it will soon catch up with its peers. His logic is as follows:
“L&T Finance Holdings (LTFH) has moved up by 23% in last 3 months due to better than expected Q1FY17 performance, long term strategy of improving ROEs significantly from current 13% and significant valuation discount compared to peers. Recently we had an interaction with management of LTFH to know the developments with regards to implementation of new strategy. Thereafter we have revisited our estimates and assumptions to capture in slightly longer view in our model and its likely impact on valuations. We note that LTFH’s management has taken right steps to improve its long term ROEs materially from current 13% which will be led by 1) decline in defocused portfolio where the risk is higher like Infra, CV, CE and long term SME financing 2) significantly improving cost to income by closing the overlapped branches (like closing down a branch where there is a branch of L&T Finance and also of L&T Housing in same location / area), 3) reducing the risk in wholesale / infra business by focusing on only operational projects which is likely to limit provisioning and 4) stable consolidated NIMs. While there is upside risk to our margins assumption mainly due to 1) likely positive surprise from higher growth in Tractor book which is high yielding and 2) increase in Loan Against property and develop financing book which again is high yielding. Hence we upgrade rating to BUY with upwards revised target price of Rs 115, implying 2.8x FY18 ABV (3 years PT of Rs 155 based on 2.8x FY20 ABV).”
L&T Finance Holdings also recommended by Sandip Sabharwal
It is significant that Sandip Sabharwal has also recommended L&T Finance Holdings recently as one of his mid-cap stock recommendations. The other two stocks recommended by him, namely, Manappuram Finance and Jain Irrigation, are firing on all cylinders as of now and L&T Finance Holdings is also expected to join the party.
L&T finance holding is a safe stock which may give steady returns at 15 % CAGR for long term. I had already discussed merit in investment in this stock few months back in Stock talk as 10 bagger stock idea, when stock was around 60.In finance sector conservative management needs to be respected as lending is easy job, problem is in recovery.
In similar category, I also put IDFC bank and DCB bank, which I also think can give 15% CAGR return in long term, both these two stocks were also discussed as long term 10 baggers in Stock talk along with L&T finance holding. If invested in these three stock as basket, one can hope for steady 15%CAGR return for long time. This is my view, so not any recommendation.
He said the same about Camlin Fine Sciences!
Check LG Balakrishnan.. it is rocking after.suggested by Chhokaling in ET
This is just my opinion and you are free to disagree. My observation is all these so called experts like Daljeet, Sabarwal etc give recos of well known names. And they will certainly perform. But not to the satisfaction of you and me. For example JB Chemicals. If his recommended price was 337, in the next one year it will go to say 600 or 650. What people dont realise is 337 to 650 is the same as 37 to 65 or 1.75x. This is no big deal in one year! So only a safe investor with almost zero risk as his profile can invest in such stocks. Now lets take for example in the past one year, as on today, 16th Sept’16 what returns top stocks have given us compared to their share price on 16th Sept’15. Upper Ganges gave 12x, Mahamaya Steel gave 10x, Energy Development gave 10x, Dwarikesh Sugar gave 10x, Mawana Sugar gave 8x, Store one gave 5x, Allsec Tech gave 5x, Medicamen Biotech gave 8x. The list can go on and on. In fact to arrive at Daljeet Kohli’s 1.75x, there are 91 stocks that gave better return. My conclusion is do some good research, invest boldly, you will never need “experts”.
With due respect to every one, there is big difference between investing, trading and speculating. Many of those unknown names which has become 10 x or more, are the stocks which are in market for many years had been 10x baggers or 95% destroyer and oscillating like this. They keep on oscillating between 1 to 100 since many years. Some might have definitely multiplied money but most has lost their shirts in such stocks. Better one see CAGR return of such companies since inception or last 10 years. One need to question such companies are penny cap even after being in business for decades. But still there are genuine mutibaggers on basis of business performance and those investers who are able to spot them are really Great Invester, my salute to them.
Dont compare bluechip with penny speculative stocks.
Yes..jb chemicals 500 rs target as its severely undervalued.a blue chip chemical and pharma available at pe of 17.
How are choka’s recommendations? Are they really upto the mark?
Anbody’s views …..
Choka’s reco are extremely good.. he has a great history to back his calls.. L G Balakrishnan his new pick will be a roclet soon.. its a gem he found for us.. Extremely undervalued small cap.. Buy L G balakrishnan for next few quarters to gain heavily..