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Jagannadham’s Two Picks for Long-term Investors

Author: Jagannadham Thunuguntla/Saturday, March 12, 2016/Categories: Stocks

Jagannadham’s Two Picks for Long-term Investors

Jagannadham Thunuguntla, Head of Fundamental Research, Karvy Stock Broking, believes Hatsun Agro and Hawkins Cookers to be two wealth creation picks. Appearing on ET Now, Jagannadham explained his rationale:

Hatsun Agro: After the recent budget, a lot of focus is on the rural economy and farmers. I think this segment should come into focus. For Hatsun Agro, 90% of the business is coming from milk and milk related products and 10% from the ice-cream segment. The brands of Hatsun are quite well known in south India and also their ice-creams brand Arun is well known in Tamil Nadu. The company has been operating at extremely healthy EBITDA margins and returns on equity have been growing strong. Moreover, the company is increasing its penetration from 4,500 centres to 8,500 and also penetration of villages from 8,000 to 10,000. So all in all, the company is making a strong name in the dairy products and the company is in limelight in this segment.

Hawkins Cookers: The second pick is Hawkins Cookers and it has been a huge wealth creator and a multi-bagger throughout. The recent correction is giving more opportunity for people who had left it, to enter the company again. So it is a household brand and well known in the cookware segment. The company has been maintaining extremely healthy EBITDA margins and returns on equity are all the way up to about 60 per cent or so. Moreover, the company has a strong balance sheet with zero debt and the company is also spending quite a bit on the R&D which should be helping the overall product innovation. When the Seventh Pay Commission recommendations get implemented, consumption scene will open up further and some of these brands should be beneficiaries. And Hawkins we are recommending with a price target of Rs 3,100 of late. It is a good thing to bank upon. The dip should be used to accumulate the stock.

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The technical studies / analysis discussed here can be at odds with our fundamental views / analysis. The information and views presented in this report are prepared by Karvy Consultants Limited. The information contained herein is based on our analysis and upon sources that we consider reliable. We, however, do not vouch for the accuracy or the completeness thereof. This material is for personal information and we are not responsible for any loss incurred based upon it. The investments discussed or recommended in this report may not be suitable for all investors. Investors must make their own investment decisions based on their specific investment objectives and financial position and using such independent advice, as they believe necessary. While acting upon any information or analysis mentioned in this report, investors may please note that neither Karvy nor Karvy Consultants nor any person connected with any associate companies of Karvy accepts any liability arising from the use of this information and views mentioned in this document. The author, directors and other employees of Karvy and its affiliates may hold long or short positions in the above mentioned companies from time to time. Every employee of Karvy and its associate companies is required to disclose his/her individual stock holdings and details of trades, if any, that they undertake. The team rendering corporate analysis and investment recommendations are restricted in purchasing/selling of shares or other securities till such a time this recommendation has either been displayed or has been forwarded to clients of Karvy. All employees are further restricted to place orders only through Karvy Consultants Ltd. This report is intended for a restricted audience and we are not soliciting any action based on it. Neither the information nor any opinion expressed herein constitutes an offer or an invitation to make an offer, to buy or sell any securities, or any options, futures or other derivatives related to such securities.