Angel Broking is betting big on India’s consumption story, and has come up with top picks from the space for this Diwali. Even as you plan to buy a sweets, new clothes, cars and maybe even a new house, include these two stocks to your shopping list this festive season. “Consumption remains a key sector which has an immense potential. We are talking of building 1.2 crore affordable houses over next five years which will create huge consumption demand. And what about the rural economy which is strengthening since last year’s normal monsoon. There will be a great consumption story unfolding in the coming years,” wrote Dinesh Thakkar, Managing Director of Angel Broking in a recent report. The top two picks of Angel Broking from the consumption space are- Asian Granito and Blue Star.
India’s largest ceramic tilemaker, Asian Granito is looking to double its revenue in the next 3-4 years to Rs 2,000 crore. “We want to be among the top 3 tiles companies by 2020 in the country and hope to achieve nearly Rs 2,000 crore in revenues in the next 3-4 years,” AGIL chairman and managing director Kamlesh Patel said earlier this year. “Recently, AGIL has launched various products in premium segment. Going forward, we expect AGIL’s profit margin to improve due to increase in focus for higher vitrified product sales, which is a high margin business,” Angel Broking observed in its report. Asian Granito shares were trading flat at Rs 490 this afternoon. Angel Broking has a target price of Rs 570 on the shares, implying an upside of 15% from the current market prices.
Blue Star shares were trading at Rs 796.55, up by more than 0.3% since the previous close. Angel Broking notes, “BSL is one of the largest air-conditioning companies in India. With a mere 3% penetration level of ACs vs 25% in China, the overall outlook for the room air-conditioner (RAC) market in India is favourable. Aided by increasing contribution from the Unitary Products, we expect the overall top-line to post a revenue CAGR of ~19% over FY 2017-19E and margins to improve from 5.8% in FY 2017 to 6.6% in FY 2019E.” The research and borkerage firm has a target of Rs 850 on the shares. Blue Star shares have returned more than 66% in the year so far, as oppsed to BSE Midcap returns of 33% in the same period.