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Time to focus on future multibaggers! 10 wealth creators to track for next 2-3 years


History suggests investors have created wealth whenever they bought stocks on dips. Not just any stock but those which hold the potential to deliver multibagger returns in near future.The Nifty has come down by little over 300 points or 3 percent in the past 10 days and expectations are that the decline could extend towards 9,500, and further towards 9,300, if headwinds in terms of rupee depreciation, rise in crude oil prices, and geopolitical tensions continue.The benchmark index will remain under pressure for some more time but there is plenty of stock specific action which could give returns bigger than Nifty50 or S&P BSE Sensex.“A range of 9,500-10,000 on the Nifty seems to be a good range to expect for the markets to settle down,” Shashank Khade, Director, and Co-founder Entrust Family Office Investment Advisors told Moneycontrol.“We believe sectoral rotation could be in the offing. IT services, consumer discretionary, banks which are in the midst of raising capital through the sale of a stake in subsidiaries could be interesting bets,” he said.It is tough to time the markets, but one can adopt a strategy to invest more in same stocks when price corrects by 7-8 percent from the initial purchase price. This will help in bringing down your average cost of holding in your total portfolio.In the short term things are looking gloomy but as earnings start to bounce back, and impact of the implementation of the goods & services tax surface starts reflecting in the books of India Inc. – things will improve.Most companies are benefiting from low-interest rate regime, which is helping them to build capacity and prepare for the next level of demand, which is likely by the middle of next year.Monsoon has been good and business ease up is happening post-GST, suggest experts. Earnings would match up with market valuations in the next six months and are likely to touch double digits in next 12 months.“It is a common mistake to wait for a correction before fresh allocation as one would never be able to time market perfectly. One should rather consistently look for ideas based on long-term opportunities rather than expecting quick upside in 2-3 months,” Arindam Chanda, Executive Director, and Head, Broking, IIFL told Moneycontrol.“The market has been on the upside for quite some time now. We expect consolidation in the near-term, which would create a base for further up move. We would expect an upside of about 15 percent in the next one year for Nifty,” he said.We have collated a list of top five stocks ideas which could deliver multibaggers returns in the next 2-3 years:Analyst: D.K. Aggarwal, Chairman and Managing Director, SMC Investments, and AdvisorsBharat Electronics Limited:Government’s greater emphasis on ‘Make in India’ initiative in Defence sector provides a great opportunity for the Company to enhance its indigenisation efforts and to address the opportunities in Indian Defence sector.Healthy order book and orders in the pipeline, capacity enhancements and creation of new test facilities help the company in achieving the targeted growth and also would continue to drive the growth in the coming 4 to 5 years.ICICI Prudential Life Insurance Company Limited:The company has continued to focus on savings opportunity through customer-centric product propositions, superior customer service, fund performance and claims management.Protection is a big focus area for the company, while it has a multi-pronged product and distribution approach to tap this market. The key strategy of the company has been to grow the Value of New Business through growing the protection business, while the company achieved its strategic goals for FY2017.Hindustan Zinc Limited:The company is focusing on value-added products such as die cast alloys in zinc and value-added products in silver. Management expressed confidence that in the next 3-5 years, all zinc slabs will be rolled into value-added products.Moreover, it would maintain operational growth over the next few years as it executes the next phase of growth, which will enhance global market share in zinc, lead, and silver.Suprajit Engineering Limited:The company is the most preferred manufacturer of cables and meets the demand of virtually every major OEM in the automotive sector. It would focus more on cables in the export market for better positioning.Steady demand from specific OEMs and the shoring up of control-cable growth in the auto and non-auto markets, exports and replacements would guide the further growth to the company.According to the management, its profitability would improve in coming years as its capacity expansion and integration with the acquired companies is almost done.Engineers India Limited:The company has a healthy balance sheet and strong cash balance. The company is best placed to benefit from a revival in Oil & Gas capex, given its dominant position in the segment.The company’s order inflows have improved in the last one-two years. The company has a healthy mix of domestic and overseas orders.Analyst: Dyaneshwar Padwal, AVP - Technical Analysis, KIFS Trade CapitalL&T Finance (LTFL):LTFH is a leading NBFC with a diversified portfolio after the restructure of business model the company has started focusing on selective segments using its competitive advantage concurrently economizing products which were making losses.L&T Finance Holdings Ltd (LTFH), promoted by L&T Ltd (64.2%) is a leading NBFC with a diversified lending portfolio. Over the last one year the management has restructured its business model and is focusing on selective segments where it has competitive advantage, simultaneously economizing products which were making losses.Ability to generate strong fee income will support earnings. A growth of 30% CAGR over FY2017-20 and this should support a 24% PAT CAGR over the same period.Tata Power (TPL):Being the largest integrated power company in India with an installed capacity of 8,560 MW, Tata Power (TPL) has been impacted by various sectoral woes like higher fuel price, increased regulated assets and huge debt level but better days are ahead.The change in Indonesian policy to link the export price of its coal with the international index in September 2011 led to an increase of the generation cost for TPL’s 4000 MW Mundra UMPP to Rs2.85/Kwh (total fixed + variable cost) against a fixed price sale agreement at Rs2.26/Kwh for 25 years with state discoms.This led to an erosion of close to Rs 3,817 crore of TPL’s networth in the past three years. Furthermore, the cost of carrying the regulatory assets at its Delhi and Mumbai operations (Rs 6,781 crore), along with a sliding rupee, has led to a working capital crunch. This resulted in increased debt of Rs 40,874 crore as on 3QFY15 (D/E of 3.7x) vs. Rs18,500 crore in FY10B.L. Kashyap and Sons Limited:B L Kashyap & Sons, incorporated in the year 1989, is a Small Cap company (having a market cap of Rs 852.07 crore) operating in Construction sector.B L Kashyap & Sons key Products/Revenue Segments include Construction Work (Job Work) which contributed Rs 837.68 crore to Sales Value (99.52 per cent of Total Sales) and Other Operating Revenue which contributed Rs 4.01 crore to Sales Value (0.47 per cent of Total Sales)for the year ending 31-Mar-2016.Orient Bell LtdOrient is a company driven by professionals and it is taking each and every step with utmost caution. Their recent acquisition of  loss making Bell Ceramics which is bigger than Orient in size  and the business acumen to turned it around to profit  within one and a half year without any additional investment is an excellent example for their ability to spot out opportunities and utilize it properly. Fuel cost consists about 35 % of the production cost of Tiles manufacturingAsian Granito India LtdAsian Granito’s 3QFY2017 results have come in line with our estimates on the bottom-line front, while the top-line front disappointed. Revenue grew by ~4% yoy, which is lower than our estimate. On the operating front, the company reported margin improvement, primarily on account of lower raw material cost.Further, on the bottom-line front, the company reported strong growth on account of favorable operating performance. Considering the various initiatives taken by the government like smart cities, housing for all by 2022, and push towards providing sanitation would create a new demand avenue for entry level or lower priced tiles (ceramic tiles).We expect AGIL to report net revenue CAGR of ~9% to ~ ₹1,169cr over FY2016-18E. On the bottom-line front, we expect CAGR of ~39% to ₹48cr over FY2016-18E, owing to better product mix, higher B2C sales and amalgamation synergy .

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