Buy these 2 stocks at every fall: Aveek Mitra, Aveksat Financial Advisory

Talking to ET Now, Aveek Mitra, Aveksat Financial Advisory, says bullish on Orient Refractories and Monte Carlo Fashions.

Edited excerpts:


What is your own sense of the market environment that we are in and are we going to be bracing ourselves for a bit of a correction?

We are long term investors, we do not look into the markets but at the same time we feel the market may not come down. There will be a consolidation phase for a while. Beyond that, I do not have much comment about the overall market because we generally are a mid and small cap investors, invest into the Rs 100 crore to Rs 10000 crore range of market caps. I am really not bothered about the market directions.

You are just the right guest to have on today’s show because we have seen a fair amount of mayhem in mid-caps and small caps. What have you been advising your clients, how have you been managing your portfolios through the volatility?

At every fall, we are advising our clients to buy.

What are you advising them to buy?

We have looked on two-three stocks; one is Orient Refractories, the other two are; Monte Carlo Fashions which is coming out with the result today and we really do not know what will be the result but it is expected to do well in the coming days.

And the other one is a smaller company called Phase Three in the space of textiles and exports. We are basically looking into the valuations and whenever we are looking at the valuation and finding a comfort of valuation, losing money from this point of time is tough. If we can take care of that, everything else can be taken care of. We feel that there is a serious upside possible over a period of time in about a year or so.

I want you to talk about two of your recommendations; one is Monte Carlo and the second one is Orient Refract.

We like Monte Carlo simply because gradually the company is shifting from its woollen wear segments to cotton segments. Over a period of time, Monte Carlo’s cotton segment business has crossed 50% of its total revenue and anyway they are a player to reckon in woollens. Last two quarters for them had been pretty bad. The Q3 had gone for demonetisation because their most of the sales come MBO and in Q4, there was a spillover effect of that Q3 because of early discounting. Going forward, this company should do well and though there are a few issues with this corporate as a whole for the market but we feel there is nothing much to be concerned if the numbers are coming and this company pays good dividends till now so keeping that in mind and finding that the company has invested almost over Rs 90 crore on brand building over a period of time on an all India basis because woollen business was basically a business confined to the north and east India.

Now, with the all weather business of cottons, this can spread all over India. Keeping that in mind and keeping a formidable kind of brand name, it is a debt free company we feel that there is nothing much to lose in this particular stock and on a long term basis can be a very sustainable growth story at least for 50-60-70% upside over a period of time, maybe an year or so. The second stock it is a proxy play on the steel up cycle. This company is Orient Refractories makes refractory bricks and as you know that refractory bricks have 85% are used in the areas of steel and India has about 600 electric arc furnaces and all integrated steel mills and this is an oligopolistic market with basically four players.

The largest player is in the unlisted place which is TRL Harima Krosaki and the two other players in the market are Vesuvius and IFGL Refractories.