While a few Sensex stocks have been underperforming the markets, ace investor Porinju Veliyath is betting on ITC, and says that the stock can give up to 20% CAGR returns over the next five years. In an interview to CNBC TV18, Porinju observed that the biggest wealth creators in 2017 have shed some gains extending into double-digits in the past two months. He attributed the correction in these stocks to be on account of valuations. According to Porinju, ITC has been trading in a PE band of 25-30 times in the last decade. Sharing that he is buying into the stock, Porinju said that it is now available near the lower end of this range.
Apart from being available at the lower PE, Porinju said pointed out that ITC is now making huge investments to expand its non-cigarette business. Sharing his return expectations from ITC shares, Porinju Veliyath said that ITC is at an inflection point and investors can get reasonable 15-20 percent CAGR returns for the next five years if they enter now.
In the interview, Porinju reiterated that Tata Sons Chairman N Chandrasekaran is doing a wonderful job, and he is bullish on shares of Tata Global Beverages, Tata Coffee and Indian Hotels. According to Porinju, these three stocks provide safety to minority investors.
“Tata Coffee has deep value. Indian Hotels is also looking good and is at an inflection point,” he said. Apart from the above mentioned stocks, Porinju said that investors can invest in Britannia Industries through the shares of Bombay Burmah Trading Corporation. “If somebody likes the business, one can still buy through the Bombay Burmah Trading. This offers a deep discount which over a course of time should come down,” he said. Bombay Burmah Trading shares were trading at Rs 1,270 on NSE this afternoon.
In the interview, Porinju Veliyath also spoke about shares of VA Tech Wabag. The ace investor had recently purchased the shares for his PMS clients. According to Porinju, Va Tech Wabag has a clean balance sheet, and is a very well-managed company. It could be a stock to watch in near future,” he said adding that investors need not buy the stock in a hurry.