Betting on 2 midcap stocks for wealth creation: Ashish Maheshwari, Blue Ocean Strategic Advisors

Talking to ET Now, Ashish Maheshwari, Director, Blue Ocean Strategic Advisors, says INEOS Styrolution India Ltd and Rane Madras Limited are the two stocks he is bullish on.

Edited excerpts:

Tell us what is the first stock on your radar?

My first stock idea is from the midcap segment and this is a company called INEOS Styrolution India Limited. This is a company which makes ABS. An ABS is something which you find a lot of application in your day to day life be it in cars in dashboards and plastic bumpers cars as well as electronic items like TV remote, LED screens, your refrigerator or even white goods. This is the reason while in December, they made a profit of Rs 5 crore only, in March, the net profit went up to almost Rs 30 crore. Along with Bhansali Engineering Polymer, INEOS Styrolution Limited have cornered 75% to 80% of the market.

The market is growing very rapidly and in this duopoly kind of position, this company will do much better in coming years. I am expecting this year, the company will do an EPS of almost EPS Rs 70. The stock is still available at less than 15 price earning multiple from FY18 earnings. This company is owned by a multi-national group and they own almost 75% of equity with public float of less than 20% in this company. Going forward, I am very bullish on this particular stock. As soon as they announce any capex plan, the stock could shoot up to Rs 1300. This is my first wealth creation idea.

What is your second wealth creation idea?
The second idea is again from auto ancillary industry. This company is called Rane Madras Limited. Again, it is a high growth company. I am expecting almost 60% CAGR growth in terms of bottom line in next three years in this company. They are making steering and linkages which are used in all cars as well as commercial vehicles and the way the sales of auto companies are picking up, this company is going to do much better going forward.

I am expecting from FY17 they would do a top line of almost Rs 1000 crore and PAT of Rs 19 crore. In FY19, they will do sales of almost Rs 1300 crore and PAT of almost Rs 50 crore. On a small equity base of Rs 18 crore, this stock is also going very cheap and in my view this has potential to touch almost Rs 800 mark in next one year. So these are the two ideas from my side.