AlfAccurate sees Sensex@46K; suggests midcap multibaggers

Written By Unknown on Kamis, 21 Agustus 2014 | 18.00

Rajesh Kothari, Managing Director at AlfAccurate Advisors says the BSE benchmark Sensex could tough 46,000 by March 2017, with a robust earnings growth of 18 percent. He says sectors like infrastructure and construction are likely to see a revival in FY16.

"We expect broad-based wealth creation across sectors," he told CNBC-TV18's Menaka Doshi and Senthil Chengalvarayan in an interview.

He is positive on auto and auto ancillary, cement, private sector banks and consumer durables. As far as picking multibaggers, he says, the trick is to pick a company is a leader in its sector.

Midcap multibaggers to bet on:

Motherson Sumi & Sundram Fasteners

Rationale: Earnings to double in the next 2-3 years.

"We expect the revenue growth for these companies to grow at 20 percent CAGR. So, if the revenue grows at 20 percent CAGR then the profit can grow at 40 percent CAGR," Kothari said.

Gabriel India

Rationale: The company is gaining from the strong growth in its clients TVS Motors and Honda. It is also expected to gain from the impending revival in CV sector.

"We again believe earnings can double for the company in next 2-3 years. The stock is trading around 8 times price-to-earnings FY16," says Kothari, which is very cheap according to him.

CARE

Rationale: Trading at huge discount compared to CRISIL and ICRA

"If you're wiling to pay 25 times for CRISIL (which has moved up quite a lot), why not pay for Care? Care has potential for earnings and valuation growth," Kothari says.

Hitachi

Rationale: Trading at attractive valuation

"Hitachi reported close to Rs 45 crore net profit in Q1. It means they will do close to around Rs 80-85 crore profit in FY15 itself. Now, even if we assume 20 percent growth, it means Rs 100 crore profit for FY16. The marketcap of Hitachi is probably now trading at around 12-13 times price-to-earnings multiple. We think it can trade at 18-20 times," Kothari said.

Maharashtra Seamless

Rationale: Huge operating leverage as capital utilisation improves

Indian Hotels

Rationale: Efforts to reduce debt, corporate segment to drive occupancy

AIA Engineering

Rationale: Remain positive; revival in cement industry to add to margins


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