As the year 2009 comes to an end we need to start looking at the prospects of the stock market in 2010. Though the possible returns are likely to be less muted compared to 2009, yet the New Year offers interesting money making opportunities in sectors like IT, Automobiles, Pharma, Banking, Metals and Alternate Energy. We list down 5 stock ideas which may be helpful in wealth creation in the coming year.
M&M
A strong management, diversified product portfolio, fair debt-equity position and robust balance sheet make M&M one of the best stocks in automobile sector. With the revival in global auto sector, the core business continues to remain on a strong footing. The stock still trades at discounted valuations compared to its peers. Further its investments in others group companies provide decent upside potential to its valuations.
Yes Bank
The bank has shown tremendous performance in terms of growth in advances. Further, improved cost ratios and stabilised asset quality augurs well for the bank. The bank’s aggressive target to double the branches by 2011 and proposed entry into asset management and broking business make it a good investment bet for 2010.
Tata Steel
The company has already announced aggressive capex plans of Rs 1500 crore in H2FY10 and around Rs 4500 crore in FY11 mainly for expansion in Jamshedpur
Suzlon
The company has started the process of reducing the debt on its balance sheet. In wind energy it remains the most established player. Once the debt burden gets reduced the company is likely to start performing very well again and can prove to be a multi bagger.
Kale Consultants
3 comments:
Hi Ashish,
I have some concerns regarding promoter warrants in Kale. It appears to be disadvantageous to retail investors. Written at more detail at http://tarkeshwarinvests.blogspot.com/2009/12/kale-consultants-promoter-warrants.html
What is your take on that?
Thanks,
Tarkeshwar
I find suzlon attractive as far as valuations are concerned amongst these 5 picks.
Dear Tarkeshwar
I agree with your observation that issue of warrants to the promoters at Rs 44 was against the broad interests of the minority shareholders. We have taken up this concern in our discussions with the management also. While this act can certainly not be overlooked yet it is not a violation of any SEBI or other security regulations. Moreover, it is a regular practice in our corporate world. Though on many occasions such as this one it is not fair to investors yet it is fairly prevalent. I agree with your observation that the promoters effectively got an option to subscribe more shares at an extremely low price and this option would probably have not been exercised had the markets and the share price of this company remained at those abysmal low levels. Regulators should look into such practices which compromise shareholder interests and come up with suitable changes in the regulations for preferential issue of shares and warrants to promoters.
On the positive side this is an act of reassurance from the minority shareholders’ point of view. Any promoter committing money to increase his stake lends confidence to the future business prospects. Nevertheless, a rights issue or buy back of shares would have been a more desirable way of increasing promoter’s stake and giving all shareholders an equal and fair opportunity.
In conclusion, I would say that this act would go down as a sign of investor unfriendliness but still does not take away the great future growth potential of the company. The company’s shares have moved up smartly over the last couple of weeks but still offer good scope of generating returns in the near future.
Post a Comment