Voltas can see 300 levels: Rajesh Jain, Market Strategist

Rajesh Jain, Market Strategist, in a chat with ET Now talks about the capital goods stocks.

Talking about capital goods as a space, would you look to buy anything here?

Lots of stocks out there like Elgi Equipments, Voltas, Greaves Cotton - all of them form the tier 2 space. Voltas particularly has created businesses in Singapore, Hong Kong and Saudi Arabia as a hedge to the decline in Dubai which was a core part of their EPC business. The textiles and the mining business is looking up in addition to the core EPC business there. Unitary cooling business has shown gains of close to 40% and going forward with an EBITDA margin in 9-10% levels, Voltas is a stock which is ripe to see a level of 300 in a year’s time.

In the capital goods space even though the IIP numbers have signalled some concern on the secular nature of the growth out there and the sustainability, I suspect with the real investment in the economy picking up, stocks like Ingersoll Rand, Atlas Copco, Alfa Laval, Thermax would show better traction in their order books. With some sort of relief on the input costs, I suspect that margins will be sustained if not improved. In the next three quarters, I expect all of them to show excellent returns on the bottom line basis. But in this space, the best picks would be the multinationals - ABB and Siemens