First the warning: Indian markets are not exactly cheap and have been falling for the last few weeks. If sentiments take a turn for the worse there is no telling how stocks can fall, no matter how strong they are. However, we have picked a few stocks that are capable of weathering the storm and could be good value picks over the long term.
Polyplex Corporation Ltd (PCL) is one of the world's largest manufacturers of thin Polyethylene Terephthalate (PET) film.
This finds application in Packaging, Industrial, Electrical & Imaging industry. The company has plants and distribution facilities in India, Thailand, Turkey and the US. Polyplex has a capacity of 186,000 metric tonnes of thin PET film and 28,800 metric tonnes of thick PET film which comprises large part of its capacity.
The company has also over the years integrated backwards for the manufacture of PET Resin, which is key raw material for production of PET films. This augurs well for the company which is able to save on costs.
Polyplex: Strong on fundamentals
Polyplex is strong on fundamentals and has been paying very good dividends. In fact, the company has paid a dividend of 90% on 2017 and 60% in 2016. The company's shares are also currently trade below the book value.
Apart from this the end consumer industry are also growing at a frantic pace which augurs well for the company. the company can report an EPS of Rs 70 for 2018-19. The stock is thus available at p/e of just 8 times. For some reason the stock has not received good discounting and most certainly deserves better valuation. It will not be a surprise to see the stock re-rated once again.
This company could be one of the key beneficiaries of India's digital drive. Sterlite Technologies (STL) has a solid 40 per cent market share in the domestic optical fibre market. It is riding on the demand of OF/OFC from global telcos as they plan to build 5G networks.
The company is looking to expand its optical fibre capacity by almost 50 per cent in the next 18 months. Sterlite Technologies plans to achieve the capacity utilization of 90 per cent by 2019. This could see a sharp jump in revenues in the coming years.
Sterlite Technologies: A good buy
Sterlite Technologies also has a good solid presence in the software services business, where it has a strong order position.
We believe that by 2019-2020, the company can achieve an EPS of Rs 14 at the very least. If we apply a p/e of 40 times the stock should trade at Rs 560 at the very least in the company few years.
Expansion, strong order book and a focused management team, make the stock of Sterlite Technologies a good bet at the current levels.
KCP Sugars is among the better sugar stocks to own. It has two manufacturing facilities in Andhra Pradesh and also engages in Extra Neutral Alcohol, Ethanol, Incidental Cogeneration of Power, Organic Manure, Mycorrhiza Vam, Calcium Lactate and CO2.
The company has had a superb financial performance for the quarter ending June 30, 2017, when net profits jumped to Rs 11.29 crores from a loss in the previous quarter. KCP Sugars performed even better for the period ending Sept 30, 2017, when its net profits rallied to Rs 22 crores.
The company has a good track record of paying dividends and if the dividends like last year are retained the stock would be available at a dividend yield of near 3 per cent.
KCP Sugars: A good bet
The share price of the company has fallen from levels of Rs 42 to Rs 27. The stock is also trading near book value levels. We believe that sugar prices would continue to remain robust in the coming years.
KCP Sugars is a very old sugar manufacturer and has the potential to deliver. Investors with a long term perspective can buy this stock.
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