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Buy Infra stocks: Porinju Veliyath Recommendation

Posted: Fri Aug 11, 2017 10:01 pm
by Pee Vee
Infrastructure story is good for next 10 years:

Infrastructure theme will become big in the next 10 years, Porinju recommended. However, he added that investors have to hunt for survivor companies and not just any company because it is a tough environment.

The most important factor for investors who are hunting for value in infrastructure space should look for companies with survivor balance sheet.

India has got many verticals of infra – railways, aircraft, airports, shipping etc. and 15-20 sub section in the same space.

Commenting on the recent IPO listing of Cochin Shipyard, Porinju said that it is a good company even though it is a PSU. It is a well-managed company with a dedicated workforce and there is some more money left for investors on the table.

Cochin Shipyard share price started off the first day first trade at Rs 461 on National Stock Exchange, higher by nearly 8 percent over the issue price of Rs 432.

The stock immediately gained momentum further and hit a high of Rs 528.15 in early trade, up more than 22 percent over IPO price.

Porinju said that he was very bullish on markets after demonetisation. And, he knew there could be 2-3 quarters of pain for some companies.

Investors should look at those companies which might go through the pain of two-three quarters. Those companies were beaten down very badly and that is where the big money is, Porinju added.

The recent correction in Nifty of about 400 points should not worry serious investors who want to remain in the market for long term. The India story is intact and nothing has changed with respect to fundamentals, but to make money investors have to leave emotions aside.

This is not the time to be bearish on market or the whole world is peaking out. There are many things which are going right for India such as stable politics, changing the economy, domestic funds flow in markets, and consumption story still remains intact, said Porinju.

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Re: Buy Infra stocks: Porinju Veliyath Recommendation

Posted: Wed Sep 06, 2017 3:19 pm
by silam
Hi,

Can we buy cochin shipyard at the CMP - 532 Rs.
Please advice.

Kind Regards,
Silam

Re: Buy Infra stocks: Porinju Veliyath Recommendation

Posted: Wed Sep 06, 2017 11:09 pm
by Pee Vee
silam wrote:Hi,

Can we buy cochin shipyard at the CMP - 532 Rs.
Please advice.

Kind Regards,

Silam
Cochin Shipyard is an excellent stock. It has been recently recommended by Avinnash Gorakssakar, Joindre Capital:

The first stock we like is Cochin Shipyard Limited. Cochin Shipyard made an initial IPO in the month of August 2017 and is one of the largest ship building players in India. In fact, the company made an IPO at a price of Rs 435. If one were to speak on the business model of Cochin Shipyard, then the company has a very large broad based product bouquet and it caters to the Indian defence as well as several global companies.

In fact, the company posted a top line of close to Rs 2000 crore last year with an EBITDA of close to Rs 450 crore and a profit of Rs 356 crore. In fact, the company has paid a dividend of close to 90 odd per cent for the year FY17. We believe that the company’s order book is quite strong. In fact, the company has a current order book of close to little over Rs 3000 crore. Therefore we believe that the revenue visibility and the top line visibility for the company looks extremely strong at least for the next 12 to 18 months.

The company has also tendered in for many several new defence projects both India as well as globally and we believe that in the coming two to three quarters, some further news flows on these developments would be fructified in the financials for the company going forward.

As far as the company’s business for FY18 and 19 is concerned, our sense is that at least 14% to 15% CAGR growth in top line is expected. EBITDA margins are going to be maintained around 17% to 18% and since the company is virtually debt-free, has got cash of roughly about Rs 2,000-2250 crore on the balance sheet as of now. We believe that whatever capex the company has outlined, around Rs 2700 crore over the next three to four years is likely to be financed largely by internal accruals.

The company has equity of Rs 135 crore and our sense is that in the current year we could see earnings of almost Rs 28 to 29 and thereafter in FY19 around Rs 32 to 33. This company can definitely get a PE multiple of at least 24 to 25 times. Looking at its balance sheet strength, its dominant market presence and most importantly, its very unique positioning in the Indian coastal defence market, we believe that this player should definitely be watched by both investors from a medium to long-term horizon.

Our target price over the next 12-15 months is Rs 675 but we believe that longer term, in fact much more risk reward can come from the stock.


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