Vardhman is available at fair value, NTPC not best bet: Rajesh Jain

Rajesh Jain, Market Strategist, speaks on NTPC, Vardhman Textiles & Container Corp in a chat with ET NOW.

What do you make out of NTPC as a stock?

Rajesh Jain: Let me be very honest. I have never been a big fan of the power sector or the power space. I think NTPC has tremendous size and critical mass going for it and hence it is one of the favourite picks in the power sector space and whenever there is a new bout of FII buying that takes place or there is a weightage correction that has to happen, NTPC invariably becomes a beneficiary of that. But this is a stock which does not give you too much of odd performance.

I certainly would not put it at the top of my pile of stock picks for any kind of class of investment. However, I think in NTPC going forward the real kicker for investors can come from two things. One is if they are able to produce and distribute power well above the mandated rate up to which you get a fixed return on your capital and the second is if it looks at diversification into the nuclear power space. I think these are the two things which would excite me about the stock, otherwise essentially I do not have a fancy for the power sector and NTPC certainly is not one of my top 10 picks.

Vardhman Textiles. With respect to most of these textiles counters in fact they were buzzing on the hopes of that yuan revaluation, but if we look at this stock in particular really sporadic and erratic kind of movement that we are seeing which direction do you estimate it will take?

Rajesh Jain: Vardhman Textiles or for that matter any good textile story you should not be looking at it on a point to point basis. These are not trading plays, but however if you look at it 18 month-3 year-5 year kind of horizon, you will see that it gives you very good returns. Vardhman Textiles has been a good play, it has got tremendous gains coming to it out of spinning. The cotton issues have been sorted out. So there is a pricing upside in the yarn that they make. It has also got a residual steel business.

The company has managed its finances very well and it is now venturing into readymades which should help it increase its margins as well. There is a substantial export business also which should act as a good driver. I think the stock is available at a fair good value and going forward I would not be surprised if you are able to get a 50% kind of return in a 12 to 18-month horizon.

Container Corporation, how strongly are they doing?

Rajesh Jain: They have been investing tremendously in rolling stock in technology for tracking consignments and also in creating port infrastructure. There has been substantial competition which is entered by way of the private sector, but despite that I think they continue to hold on to their numero uno position not just because of legacy reasons but also because of the fact that they have one key success factor which is the networking into the Indian Railways.

Unfortunately that is a legacy issue, but right now the question mark is given the European situation you might see a bit of a recessionary trend in the net TEU, movement in the TEU growth that the company shows but I think if that happens and there is a tip in the stock, then that would be an ideal time to accumulate it for the real long term.

This is a stock I have tracked for almost a decade and a half now and I have seen the company go from strength to strength, always adding on that critical infrastructure and the capacity required to stay in tune with the new international trade requirements.