Two stocks that could help to create wealth: Gaurang Shah, Geojit BNP Paribas

In a chat with ET Now, Gaurang Shah, VP, Geojit BNP Paribas, says Ujjivan Financial and Banco Products could prove to be good picks.

Edited excerpts:


What is the first stock on your radar?

From the NBFC MFI segment, a microfinance company and this one is a relatively recent listing. The stock is Ujjivan Financial and even when the IPO was about to hit the market, we had recommended a subscribe to this particular IPO in our initial note and post that, the listing has been good. The earnings that Ujjivan Finance has delivered has been in line with our expectation. There is a slight bit of disappointment in terms of demonetisation and the recovery process went on to the slow track but with the remonetisation and of course the recovery process picking up steam, we believe earnings will improve.

What about your second idea?

The second one is from the auto ancillary/OEM CV segment, and this one is Banco Products. I remember very clearly we initiated the coverage somewhere close to about Rs 130-140 with a target of Rs 180-85. That target is surpassed and we have reviewed our coverage with a revised target on Banco Products at Rs 235. Now this is one company which saw some amount of stagnancy in terms of earnings because of the slowdown and the dependency of this particular company on the CV segment.

Now with the earnings likely to improve and the entire CV segment looking more robust and with the commentary that the management of CV manufacturing vehicles have given out, we are quite sure that we are going to see a very smoother uptick in terms of order flows, not only from the new order market but also from the replacement market and equally positive of the GST rollout wherein you will see demand going up, scrappage of old commercial vehicle will throw in more positivity for demand from fleet owners.