Escorts and Balrampur Chini are good bets: Pankaj Pandey

Pankaj Pandey, Head of Research, ICICI Direct, in a chat with ET Now talks about Escorts.

You have a buy on Escorts?

It is our preferred pick for year 2011. The reason why we like this stock is the company has been doing well in terms of volume growth of about 32% in tractor sales. The construction equipment business is also picking up with growth seen at roundabout 20% and going forward we would expect this business to be EPS accretive. The company has also managed to de-leverage its balance sheet from about one time debt equity to about 0.2 times and going forward if you look at this stock is trading at below 8 times on FY12 basis, EPS of about 25.5 and if you look at compared to Mahindra & Mahindra, this stock is trading at about 20% discount, so even if the company is going to grow quite well, we get a decent upside in the stock.

Another stock what we like is Balrampur Chini. Sugar as an entire pack should do well in the first half of the calendar year primarily because of the higher sugar prices, which we have seen plus millers will get benefited in terms of better sugarcane availability compared to last year, so the sugarcane cost is going to be pretty much lower to about 250 odd levels is what per quintal most of the millers paid last year, especially in UP and this year we would expect them to pay an average cost of about 220 odd, so given that sugar as a pack should do well and Balrampur Chini is trading much closer to its replacement costs wherein we feel that historically the stock takes support at these levels, so given that we are quite positive on Balrampur Chini as well.