A decade or two back, the only initial public offerings or IPO’s which attracted the Indian investors were sectors related to engineering and construction. But in this new financial year, a couple of unrelated non-traditional companies in sectors like micro finance, healthcare and staffing have come with their initial public offers. The success of these IPO’s can be attributed to the fact that many of them cater to the broader Indian consumption theme and have high potential for growth. Investors can now look forward to equity offerings from the Bombay Stock Exchange, HDFC Standard Life Insurance and ICICI Prudential Life Insurance companies in the next few months for solid investment opportunities.
Many brokerages are upping their yearend targets for the Sensex trending on the positive data emerging from the economy. Experts say the market volatility may continue for some time after the Sensex hit a multi month high of 27,000. Market men will be eagerly waiting for key events — RBI policy meeting on 7 June, Fed meeting on 15 June and British referendum thereafter. Fresh positive data on the onset of monsoon and the RBI’s stance on policy rates will set the Bulls on a fresh charge.
Small cap company, Banco Products India Ltd was founded in 1961 with the purpose to design and manufacture radiators and gaskets as an import substitute for the Indian OEM industry, railways and the defence sector. The company got their shares listed on the exchanges in 1987 and subsequently began its export sales to Europe in a major way. Most analysts are expecting an EPS of close to Rs 15-16 for FY 17 while the Banco stock is currently ruling at a P/E multiple of less than Rs 12. The P/E multiple should improve to Rs 15-16 in the coming quarters on the back of sustained accumulation by fund managers and high net worth investors. The Rs 2 face value stock rules at the stock exchanges at Rs 138 and on an attractive dividend payout of 150%, the dividend yield comes to a little over 2%. The company has a cash balance of over Rs 70 crore on its books and if one discounts the same from the book value of Rs 100; it creates immense wealth for share holders to buy this debt free company for fantastic gains. There are expectations of the Japanese technical collaborator picking up an equity stake at a substantial premium and large orders from the Indian Defence sector could re-rate the Banco stock to achieve a price target of Rs 220 in the next few quarters.
Rajiv Kapoor is a share broker, certified mutual fund expert and MDRT insurance agent.