It is no secret that Ramesh Damani is an admirer of PSU stocks. He regards them as a good balance between risk and reward. While your rewards are limited owing to the inherent deficiencies of being a PSU, so are your risks. You can rest assured that the promoter is not a fly-by-night operator who will scoot off in the stealth of the night with your hard-earned savings.
However, even Ramesh Damani would be pleasantly surprised at the way National Building Construction Corporation (NBCC), one of his recent stock picks, has fared. Over the past one year, the stock has given a mind-blowing 473% return.
I reported that Ramesh Damani had recommended NBCC in August 2014 (actually, he had recommended it much earlier). The price at that time was Rs. 455.
Then, a few days later, when the stock had dipped to Rs. 446, PN Vijay sent out a buy call.
Soon after Ramesh Damani’s and PN Vijay’s recommendation, the wizards of Nomura also came out in support of the stock with all guns blazing. Nomura confidently predicted a 49% upside to the stock.
All three stalwarts, Ramesh Damani, PN Vijay and Nomura, gave impeccable reasoning on why NBCC would be the star stock of the year.
Well, at today’s CMP of Rs. 817, all people who trusted NBCC are basking in great riches. Even from the time of Ramesh Damani’s last recommendation in August 2014, the stock is up an incredible 80%.
Now, the best part is that if you are feeling left out and despondent at having missed out on the great riches, you can cheer up because Nomura has promised more gains from NBCC.
In their latest report, the wizards of Nomura have convincingly argued that NBCC is still a buy with a price target of Rs. 1049 on the logic that the land and housing redevelopment opportunity will drive strong earnings growth and that multiple triggers are in place to drive more than 34 percent revenue CAGR over FY14-17F.
The bottom-line is that we need to have a chunk of stocks that will benefit from NAMO’s 100-cities game plan. One way is to grab the housing finance stocks like Repco, Dewan Housing, GIC Housing. Another is to tuck into stocks like Cera Sanitaryware, Kajaria Ceramics etc. Yet another option is direct realty plays like Ashiana Housing.