India Strategy - Oct 10 2010
Sunday, October 10, 2010
Fresh investments with a long-term perspective can be considered in the stock of Bajaj Holdings and Investments.
The stock continues to trade at a significant discount to its investment book at today's market value. It holds stock in the Bajaj Group companies and a chunk of the ICICI Bank stock.
Investors willing to stay on for the long-term can buy the shares of Ashok Leyland (ALL). Greater operating leverage from sale of higher tonnage vehicles, higher profitability from increased utilisation of the Uttarakhand plant, de-risking of product portfolio and expected benefits from joint ventures lend high visibility to earnings growth.
After a long time in the wilderness, the Indian aviation sector has staged a comeback over the past six to nine months, primarily on the back of a growing economy and improving industry dynamics. Jet Airways, with the largest share in the domestic market, has been a key beneficiary.
Investors with a high-risk appetite and with a two-three year perspective may add the stock of construction contractor MBL Infrastructures.
At Rs 273, the stock is 11 times its trailing four-quarter earnings and 9 times estimated FY11 earnings. Peers such as KNR Constructions and PBA Infrastructure trade at similar valuations. Backward integration leading to strong operating profit margins, a healthy order book, secure client base, graduation to a road developer and wide geographic presence bode well for this construction contractor.
No loud advertisements but still people know the name redBus. The company clocked revenue of close to Rs 50 crore last year, the third year after inception. In the business of bus ticketing, redBus.in sees an average of 50,000 unique hits a day and has a presence in 15 States, covering 2,500 cities and 700 bus operators (including Konduskar Travels in Mumbai, Sharma Travels in Bangalore and KPN Travels, a leading bus operator in the South that runs 15,000 schedules a day).