Even in a crashing market, there are some stocks, some stories that can be counted to bail you out. Even in the last May-mayhem, the market had found some support through such stocks.
Ashish Shah of A C Choksi picks two stocks that can deliver superior returns. These stocks may not necessarily be low priced, but may offer good value to investors in time to come.
Shah says that Timex is an interesting story as it is the only watch manufacturing multinational brand in the country. He adds that looking at the market expansion, they expect it to do well in the coming years.
His next pick is International Travel House for which they expect a 50-70% appreciation in a year or so.
Excerpts from CNBC-TV18's exclusive interview with Ashish Shah:
Start with Timex first, volume play, margin improvement, what are you betting on?
Timex is an interesting story; it's a 75% subsidiary of Timex BV Netherlands and it is the only watch manufacturing multinational brand in the country. Recently, they had a plan to set up 150 retail outlets across the country.
They had recently commissioned a three million pieces manufacturing capacity in Baddi in Himachal Pradesh, with a good excise benefit. So this is a different thing, which can drive this stock further.
Looking at the change in the spending pattern of people, the retailing, etc, higher end price watch stocks will have better movement because lower price watches don't get enough margin to cater to. But looking at the market expansion, we expect it to do well in the coming years.
What is the kind of target price that you have? Second, there is a lot of competition in the unorganised sector; you also have players now in the organised space like a Titan Industries, HMT, well that is a beleaguered contender, but there is a lot of competition especially from the unorganised area?
We are not much bothered about the competition from the organised sector because Titan Industries is the only one manufacturer in the country. HMT is basically commanding a very low market share.
But as far as the competition goes, the market is expanding fast with the changing patterns of consumers. Higher price watches are moving well in the market. So one can expect this to do well in the future
What about International Travel House, which is another counter that you like, essentially it's a subsidiary of ITC?
International Travel House is a subsidiary of ITC. They own something around 62%, equity in this company. This company has a fleet of 450 cars, their offices are on an all India basis and they have good inbound and outbound traveling business.
Along with this, the company recently diversified into medical tourism. So we expect good growth to come in these types of companies in future.
How much of a target are you setting on this one?
In case of International Travel House we expect around 50-70% appreciation in a year or so.
What about the risk that you would warn investors on both of these?
For Timex, the risk is from competition, basically from the unorganised sector and from the higher end brands. But the reason it is safe is because of the manufacturing capability, because Timex has a manufacturing capacity in India, which no other foreign brand has.
International Travel House is directly linked to the tourism sector. So any type of disturbance on the tourism side or any type of terror activity can slow down the tourism activity, which can affect International Travel House.
Disclosures: It is safe to assume that my clients and I may have some exposure in these stocks.
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