Betting on these 2 wealth creation ideas on 1-2 year basis: Dhruvesh Sanghavi, Prosperotree.com

Talking to ET Now, Dhruvesh Sanghavi, Prosperotree.com, says Accelya Kale and Sasken are the two stocks he is bullish on.

Edited excerpts:

What is your first stock recommendation that can create wealth on a one to two year basis?

Accelya Kale is basically a financial service provider for airlines across the globe. It has a very stable set of clients and recently was acquired by Warburg Pincus. Warburg Pincus incidentally also holds Accelya’s competitor out of UAE. They are now consolidating the competitors into one and in a recently announced disclosure, they have mentioned about having only one brand out of these two and most likely it is going to be Accelya.

With around Rs 90-91 crore of profits per year, it is trading at around Rs 2000 crore of market cap and if the consolidation of these two entities happen, I see a lot of business being shifted to Accelya India which is Accelya Kale Consultants and due to which probably we may see the Rs 90 crore run rate going up to Rs 130-150 crore. This stock can see a massive rerating. I do not think a lot of people are building in that kind of possibilities ahead in the future and above that there is a 4% yield on the stock.

Whatever it earns, almost 100% is distributed out of it. It is a very nice story considering the very low interest in the export oriented IT stories.

What is the second recommendation?
The second recommendation is Sasken. We came out with a report at around Rs 700 crore market cap. It still has around Rs 400 crore of cash available. It is a product engineering service provider and this company used to have 50% of its revenue coming from clients like Nokia which suddenly did not give that kind of orders because of its own problems. But in spite of that, today it is generating more than Rs 50 crore of operating profit.

The promoters have recently announced a trading plan which is expected. They are expected to buy up to 850000 shares in the next one-one and a half years. The company has done more than four or five buybacks in the last eight years. The last buyback was around Rs 425 and in their vision they are mentioning around $250 million of revenue which is approximately Rs 1500-1600 crore from Rs 470 crore at present.

They are talking about scaling up three times in revenues and in spite of their problems of the past, they are talking about these things so we are talking about three times jump in revenues potential and if that happens the profit growth will be much more non-linear.