2 stocks to invest in next 2 years: Milan Sharma, Rivergate Capital Partners

In a chat with ET Now, Milan Sharma, MD, Rivergate Capital Partners, says Asian Paints and Dewan Housing are the two wealth creation ideas for next 1-2 years.

Edited excerpts:


What is your first investment idea.

Asian Paints after touching Rs 1200 has come down to almost Rs 900 levels and it is a fantastic story which will unfold with the economy turning around the corner. We are almost at the cusp of that. With almost 53% share in the decorative paint industry and 50,000 strong dealer network, I think this is one stock which should be locked in for long. If somebody is looking to build up a portfolio at these levels, I think the risk reward is definitely in his favour. There is hardly any downside of not more than 4% to 5% from these levels, whereas the clear upside I can see of 30% to 40% in a year’s time. The stock has corrected from almost 1200 levels and if someone enters at these level, I think he will definitely make a money in next one or two years.

More than that, if someone looks at the financials of the company like Asian Paints with 30% return on equity and EPS around 40, there is hardly any premium valuation vis-à-vis the other players. This is a stock which should come with at least 30% to 40% premium on the price as compared to the other players. One should watch out very patiently for this stock and without any kind of downside risk, one should accumulate this stock at these levels.


The second stock that you like is Dewan Housing. Why is it a good time to buy this one?

My second call is a buy call on Dewan Housing, a midcap company with a market cap of almost Rs 8000 crore and this is one company which has already corrected from Rs 330 levels to almost Rs 240 levels in the recent correction following demonetisation and the CRR policy.

There are a lot of housing finance companies but one has to go where the value buying is and this is one stock where I see a lot of value buying.

The business model is much different from the other leading companies like LIC Housing Finance and HDFC. This company is mainly focussed on tier II and tier III cities and the product mix of the loan is fantastic.

Recently they had gone out for the Rs 5000 crore bond issue which is fully subscribed and they are very well capitalised. If one is a long-term player and looking at housing and believes in the Indian story, then this is one stock to watch out for the next one or two years and at least 40% to 50% upside one can expect in this stock in times to come.