Stylam Industries and Mahindra Holiday Resort are best mid-term picks: AK Prabhakar, IDBI Capital Markets

In a chat with ET Now, AK Prabhakar, IDBI Capital Markets. gives his wealth creating ideas for the medium term. Edited excerpts



ET Now: Your first stock is Stylam Industries. Tell us what do you like about this one?

AK Prabhakar: This company is a manufacturer of high pressure decorative laminates and the company has expanded the capacity. It has almost doubled to 12 million metres with the outlay of Rs 60 crore. This segment is more with the unorganised sector. Almost 65 per cent of the suppliers are unorganised. This company, now being an organised one, will benefit if GST comes along. They export to almost 60 countries and 70 per cent of their production is exported. The expanded capacity now will be in a wider feet or wider frame. So this is going to benefit the company in coming months and coming quarters. We have a target of Rs 355 on Stylam.

ET Now: Tell us what is the price target on Mahindra Holidays? Does it still make for a good buying point?

AK Prabhakar: The Mahindra Holiday Resort was a unique concept. Many people failed in this because of some aggressive buy. Mahindra Holiday maintained its bandwidth and it has been very slow and they have been expanding its membership before they can expand the hotels. In the last few years, there was no major expansion and now they are expanding about 400-500 rooms in the next six months to one year. They have almost two lakh as members and every quarter they are adding 4000 members to their kitty and they are making it very stable.

Now the company has bought one company from Finland which already has 50,000 rooms and 32 resorts and for which they have taken additional debt of Rs 643 crore. So I think their expansion plan is on scheme and they have a regular stream of revenue. And 80 per cent is their occupancy ratio and I do not think any hotel industry with such a low debt, has a occupancy ratio of 80 per cent. That is where Mahindra Holiday Resorts scores over other hotel industry. So I think this is a very good buy. I have a target of Rs 490 for the stock.