We r idiots sir, give some names sir
Porinju’s heart melted when he heard the cry for help from one of his followers.
“We r idiots sir, give some names sir,” the follower said, in a tone which implied that he had not been able to snare many multibaggers for his portfolio despite the raging bull market.
We r idiots sir, give some names sir
— VIKAS GUPTA (@vicky1982gupta) May 9, 2017
The lament was in response to a clarion call by Porinju that there is a “trillion dollar opportunity in housing and infra” coming up and that we should grab the stocks without any further delay.
10x in 3 yrs! Many more KNRs in making
Trillion Dollar opportunity in Housing & Infra coming up, Grab it! https://t.co/2h7d3HW1Nv
— Porinju Veliyath (@porinju) May 9, 2017
Two stellar stocks recommended, Everest Industries and Ramco Industries
Porinju wasted no time in rushing to the rescue of his followers. He immediately recommended two high-quality and fail-safe infra stocks being Everest Industries and Ramco Industries.
His logic for recommending the two stocks was flawless:
“We were discussing about that housing theme. Actually I was looking at two companies. One is Everest Industries. There is no hurry to buy these stocks today. You could buy it at 5-10% higher. There are enough opportunities in the Indian market.
Everest Industries is not fancied. There are a few companies in this sector. Even Ramco Industries which is also a holding company. It has around Rs 2000-crore market cap today. Ramco Industries holding in or Madras Cements kind of stocks should be more than Rs 4000 crore. That is always a margin of safety. In times of political uncertainties, you can buy these stocks at attractive levels. These two stocks came to my mind because we discussed the housing theme,” Porinju said with his characteristic modesty.
Needless to say, both stocks have surged like rockets since then and posted handsome gains.
Vijay Kedia makes debut in infra sector by buying big chunk of Everest Industries
One aspect that is surprising is that Vijay Kedia’s portfolio of multibagger stocks does not have any infra stock in it.
This was obviously an anomaly because it cannot be that a visionary like him does not have any stocks from a sector that is said to be a “trillion dollar opportunity”.
Vijay Kedia has now made good that anomaly. As of 30th September 2017, he holds 3,88,336 shares of Everest Industries comprising of 2.51% of the equity.
In fact, Vijay Kedia is now the single largest individual shareholder of Everest Industries and towers over the rest.
|EVEREST INDUSTRIES LTD – KEY FUNDAMENTALS|
|MARKET CAP||(Rs CR)||641|
|EPS – TTM||(Rs)||[*S]||5.75|
|LATEST DIVIDEND DATE||17 JUL 2017|
|BOOK VALUE / SHARE||(Rs)||[*S]||226.70|
[*C] Consolidated [*S] Standalone
|EVEREST INDUSTRIES LTD – FINANCIAL RESULTS|
|PARTICULARS (Rs CR)||JUN 2017||JUN 2016||% CHG|
(Source: Business Standard)
Why is Everest Industries a good buy now?
The question is an elementary one and so is the answer.
The aggressive stance of the Government with regard to the ‘housing for all’ credo means that all companies engaged in supplying building products will prosper.
Here is a sample of the numerous housing projects announced by the Government:
The Tamil Nadu Government has announced that it will construct two lakh homes under the Pradhan Mantri Awas Yojana (PMAY) at a cost of Rs 7,800 crore.
Chandrababu Naidu, the Chief Minister of Andhra Pradesh, has launched the Urban Housing Scheme in Vijayawada pursuant to which 1,20,000 houses in 38 towns will be constructed. In addition, another 38,000 houses will be built over the next two years.
M Venkaiah Naidu, the Union Urban Development Minister, has announced that over 20 lakh affordable houses for urban poor will be constructed in 4,720 cities and towns under the Pradhan Mantri Awas Yojna.
It goes without saying that a large part of this lucrative business will effortlessly fall into the lap of aggressive and dominant players like Everest Industries.
Investors’ presentation of Everest Industries reveals ambitious growth plans
The latest investors’ presentation makes it clear that the Company is destined to be a powerhouse multibagger:
• Everest Industries Limited (Everest) has over 8 decades of experience in the business of building products and is also a pioneer of fibre cement products in India.
• The company’s business is built on three key pillars: Speed, Strength and Safety.
• The vision of the company is to be the deepest penetrated housing and building solutions provider in India.
• Everest provides building products and building solutions for commercial, industrial and residential sectors.
• The company has covered more than 1 billion sq. mtrs. of industrial and residential roofs.
• It has emerged as the 2nd largest Pre-Engineered Buildings (PEBs) company in India, and has erected and designed more than 2,000 PEBs.
• The company has also diversified its product range from roofing to various other value added products like cement boards and panels for ceilings, walls and floorings.
Indian Economy in the Last Quarter
• Building material products industry is likely to turn around strongly, helped by macro factors such as rural housing demand, raw material prices, GST rates and a good monsoon.
• The monsoon so far across the country has been normal and since there is a high degree of correlation between monsoon and rural incomes, leading to better farm output and more disposable income in the hands of rural customers and sale of roofing sheets
• This quarter has seen a successful application of GST across all sectors and Government officials are keeping a close watch on implementation of the same going forward.
• GST is expected to benefit the organized sector in Building products industry by providing a level playing field which would bring in consolidation in the industry thereby elimination most of the unorganized players.
• Further government initiatives like “Swatch Bharat Abhiyan”, “Housing for all by 2022” & “Smart City Mission” would drive additional demand for Building Products.
• Our product have been kept at 18% bracket
• Reduction in GST on fiber cement sheets to 18% is a welcome step in improvement of the market as these are more affordable for the end consumer.
Solar rooftops will be new growth driver?
The Government has announced a target of 40,000 megawatt (MW) solar rooftops.
India offers a big opportunity for solar power given its 750 gigawatt (GW) potential on account of enjoying 300 sunny days a year with an average solar radiation range of 4-7 per kilowatt-hour (kWh).
According to news reports, Everest Industries is in talks with Engie, the French behemoth, to set up a partnership to manufacture solar ready rooftops.
Dolly Khanna and Anil Kumar Goel buy arch rival Visaka Industries
While Porinju and Vijay Kedia are backing Everest Industries, Dolly Khanna and Anil Kumar Goel are backing Visaka Industries, Everest’s arch rival.
I have already conducted a systematic analysis of Visaka Industries and explained why it attracted the two stalwarts.
In fact, Porinju appears to have preferred Everest over Visaka after doing number crunching with regard to valuations, fundamentals, prospects etc.
What about other infra stocks?
There is a number of other high-quality infra stocks that are vying for our attention and money.
Srikalahasthi Pipes is one of them.
The stock enjoys the confidence of Dolly Khanna and Anil Kumar Goel. Collectively, the duo holds more than 4% of the equity capital.
The Government’s thrust on water supply & sanitation infrastructure will spur demand for Ductile Iron pipes and this will send Srikalahasthi Pipes into multibagger territory according to experts.
SPML Infra is yet another candidate that we cannot lose sight of.
The stock comes highly recommended by Mudar Patherya on the basis that it is at an “inflection point”.
Anirudh Damani, the illustrious nephew of Ramesh Damani, holds 4,16,879 shares of SPML Infra as of 30th June 2017.
Kridhan Infra has received a clean chit from DD Sharma, the veteran stock picker. He has assured that the company is on the right path and will deliver mega gains to investors.
There is a vast array of infra stocks that we can choose. Hopefully, a few of these stocks will fulfill Porinju’s “trillion dollar” prophecy and shower mega riches on us!