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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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