2 stock ideas to invest in: Milan Sharma, Rivergate Capital Partners

In a chat with ET Now, Milan Sharma, Rivergate Capital Partners, says Rallis India and IndusInd Bank are the two stocks that can create wealth for you. Edited excerpts


Walk us through your first recommendation .

The first wealth creation idea is Rallis India, belonging to the house of Tatas. Though because of the Tata-Mistry tussle going on, the stock has corrected quite a bit. But it is a very good time to accumulate this stock at Rs 197-198 because the segment in which they operate, mainly the agriculture side of it, the pesticide business, insecticide and the seed development company which they have, they almost have a monopoly.

And even if you compare the company with the other listed companies like UPL and all, you find a huge discount into enterprise value or into book value or in terms of fair pricing using the cash flow discounting method. We work on the fair value of the stock around 420 against which the stock is trading at a huge discount of around 50% at Rs 200.

You have another strategy that is IndusInd Bank. What is the rationale behind liking this one?

My second call is a buy call on IndusInd Bank, a private sector new generation bank which has been posting continuously quarter-on-quarter growth of around 20% on net profits and building on their books.

The best part about this bank is that this is free from the the NPAs which the other banks, the sectoral banks like Axis Bank and ICICI Bank are facing and that is because when they had entered the banking industry that was the time when already the bigger banks were in problem.

So they never delved into the corporate banking side of it and now when the economy is almost on the turnaround they are trying to build a book and that is fantastic and I think it will work out in their interest in the long term.