Why Rivergate Capital’s Milan Sharma is betting on Asia Paints
Asian Paints is a very strong call on a fundamental basis with a return on equity of almost 30% and should be held on to for 2-3 years, says Sharma
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In a chat with ET Now, Milan Sharma, Rivergate Capital, explains he remains bullish on Asian Paints.
Edited excerpts:
What are your stock recommendations?
My first one is a buy call on Asian Paints. We have been recommending the stock for quite long. We have been tracking this stock and after touching down lows of almost Rs 800 in recent times, again started the upward journey. I think this is going to stop even on the financial parameter . If you look at it, it is a very strong call on a fundamental basis with a return on equity of almost 30%.
If we do a cash flow discounting for the stock, if this plans works out to be around Rs 11, what has happened in the recent times and what has happened is the valuation gap between the other peer companies as well and Asian Paints, that is one thing Asian Paints will catch up on very soon in times to come. But because of demonetisation, there is a lot of news coming in that they might have pressure on the sales which is true to a certain extent.
The way the stock has corrected, it has been overdone now. So my sense is that if someone is a long-term buyer for the stock and if it holds out for a horizon of two to three years, this is one stock where the risk rewards are very much in favour of the rewards.
The valuation gap between Asian Paints and the other companies has reduced and this gives an interesting opportunity to buy the stock. I think it is a decent buy for long term.
Edited excerpts:
What are your stock recommendations?
My first one is a buy call on Asian Paints. We have been recommending the stock for quite long. We have been tracking this stock and after touching down lows of almost Rs 800 in recent times, again started the upward journey. I think this is going to stop even on the financial parameter . If you look at it, it is a very strong call on a fundamental basis with a return on equity of almost 30%.
If we do a cash flow discounting for the stock, if this plans works out to be around Rs 11, what has happened in the recent times and what has happened is the valuation gap between the other peer companies as well and Asian Paints, that is one thing Asian Paints will catch up on very soon in times to come. But because of demonetisation, there is a lot of news coming in that they might have pressure on the sales which is true to a certain extent.
The way the stock has corrected, it has been overdone now. So my sense is that if someone is a long-term buyer for the stock and if it holds out for a horizon of two to three years, this is one stock where the risk rewards are very much in favour of the rewards.
The valuation gap between Asian Paints and the other companies has reduced and this gives an interesting opportunity to buy the stock. I think it is a decent buy for long term.
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