This article is written by Divam Sharma, founder and CEO of Green Portfolio and a former analyst at CitiBank, IMGC, and Kotak Mahindra Bank. Check out Green Portfolio’s smallcases.

Fantasy Players has been all the rage. But in the end, it is a bet and you run the risk of losing the entire capital. So, if you are looking for better avenues to make wealth, why not capitalise on India’s growth story?

Our country is in a growth phase in multiple sectors. New technologies, CAPEX cycles, and supportive policy regimes create a multi-decadal growth setup for corporate India. Here are 5 expert stock picks that you can consider this Diwali for long-term growth and compounding of your wealth.

Salzer Electronics Ltd

This stock is a part of Smallcap Compounders smallcase.

Has a steady primary business with engagement in Wires and Cables, which is forecasted to grow with industrial development in the country. The company has been diversifying its revenue sources, and the domestic sale contribution has been on a steady decline. The biggest trigger for Salzer Electronics Ltd. is the launch of the J.V. with Kostad to manufacture EV chargers. Solid conviction on the back of their intention with the business. Realising the slow evolution of the Indian EV industry, they will be exporting these charging units instead of selling them domestically. The manufacturing of these units will begin towards the beginning of FY 2023, which is the first of EV ventures that Salzer Electronics is foraging into.

CESC Ltd

CESC (Calcutta Energy Supply Corporation) is engaged in electricity distribution and integrated generation facilities in West Bengal. It distributes power in West Bengal, Uttar Pradesh, Rajasthan, and Maharashtra. It has a broad portfolio of power generation with an aggregate capacity of 2,500 MW. The distribution business of CESC delivers a high return on equity along with steady growth. The profitability of distribution businesses also improved in Noida as well as Haldia. The company is also lagging in valuations compared to peers, which gives a healthier margin of safety. The lag in valuation should diminish with profitability increasing in Distribution Franchises.

This stock is a part of High Quality Right Price smallcase.

Jubilant Pharmova Ltd

It is an integrated global pharmaceuticals company having three business segments: Pharmaceuticals, Contract Research and Development Services and Proprietary Novel Drugs.

Diversified Revenue: Jubilant Pharmova Ltd benefits from diversified revenue streams across Speciality Pharmaceuticals (accounting for 38% of revenues in nine months of fiscal 2021), CDMO (32%), generics (26%) and proprietary novel drug business (5%). Revenue is expected to remain flat in FY 2021 because of a slowdown in radiopharmaceutical business growth due to the postponement of surgeries. However, it was partly offset by a healthy increase in the generics segment due to sales of Remedesivir.

Healthy operating profit margins: Operating profitability has been maintained at 24%-27% over the past few years, backed by a focus on regulated markets and a healthy portfolio of niche products and speciality pharmaceutical business. For instance, in the radiopharmaceuticals business, a speciality product portfolio with limited competition drives profitability. Operating margins are thus expected to remain healthy above 25% over the medium term, with a healthy new product pipeline and steady growth in specialised pharma and CDMO business.

Capex plan: The company has capital expenditure plans of Rs. 1,400 cr over the next 3 yrs for expansion in speciality pharmaceutical, CDMO and Generics businesses. The CAPEX is expected to be primarily funded from internal accruals, leading to low reliance on external debt.

This stock is a part of High Quality Right Price smallcase.

Aarti Drugs Ltd

The company has APIs and Specialty chemicals in antidiabetic and other chronic lifestyle-related therapies as the dominant segment. It is manufacturing more derivatives and expanding into the formulations business globally. The company is also backwards integrating by installing Methyl Amine and its derivatives plant in Gujarat, which will help the company build the chemicals it is exporting. The company will be going for in-house production of materials to reduce the dependency on imports. The new tax regime that the company has taken will help it to lower its taxes further.

Given the premise that all these factors are present for the stock in the sector and that the top country that gives significant export revenue is the U.S. which is 30.4%. The buy thesis for the stock is that lower taxes, good backward integration followed by the expansion into formulations business and the derivatives should be a booster in the stock price, therefore looking at these significant catalysts, we believe growth is coming in Aarti Drugs.

This stock is a part of High Quality Right Price smallcase.

NCL Industries Ltd

NCL is an established player in the cement industry. Further, the company has diversified its product profile by venturing into other building materials such as ready-mix concrete, cement-bonded particle boards and doors. Company in consortium with NCL Buildtek Ltd (Group Co.) has bagged an order worth Rs. 1863 cr to supply pre-painted (G.I.) steel window frames with glazed shutters and G.I. powder-coated door frame. Successful completion of the order can significantly contribute to the profitability during the current financial year.

In the cement segment – They have a total capacity of 2.7 MTPA, and with the expansion, this will go up to 3.6 MTPA in the next 2 yrs. Cement Boards – Recently added one more plant of 30,000 TPA near an existing plant at Mattapalli in Telangana. Trail runs are in progress.

The company entered into a Joint Venture Agreement with Moravia Containers A.S. of the Czech Republic to set up a joint venture company to manufacture Modular Containers & Systems and other products. We believe that the recent CAPEX will contribute to significant topline growth for the company in multiple segments.

This stock is not part of any small case yet. It will be part of a new one.

Soch kya rahe ho? #Dimaaglaganekamuhurat aa gaya hai. Invest in stocks for a financially secure future. Now you can directly place Stock orders via Tickertape once you link your broker account. What’s more, you can place multiple buy/sell orders via Basket, just like you do in case of a cart on an e-commerce site. And transact the stocks on Tickertape itself without jumping platforms.

Disclaimer: The stocks discussed above are not recommendations. Please research them on your own or consult a professional financial advisor before trading/investing in them.

Divam Sharma

2 Comments

  1. Very useful ideas and analysis about the stock and it’s corporate data’s. Really nice to learn a good thing from this article. Hats off.

We'd love to hear your thoughts 🥰