Hot Chips - Stock Recommendations For Your Portfolio

NESCO
BSE CODE: 505355 | Volume: 1510 | CMP: Rs 783

Having an asset heavy model and a zero debt is a combination that is not found quite often. This is the prime factor to have attracted our attention when looking at Nesco. The company’s cautious approach in developing real estate and that too in a phased manner has helped them to retain a debt-free status. The Bombay Exhibition Centre is the second largest exhibition centre with a space of 0.45 million square feet in India and is the prime asset for the company. The centralised position of its makes it a sought after centre.

Also, the company receives the fees for the centre in advance which makes it a cash cow with a negative working capital cycle. Going forward, the company’s rental income is likely to move northward backed by the Building III which will be ready for lease. A sensible strategy of execution insulates Nesco from the toughened macro environment. One can look at the stock from a medium-term perspective.

EVEREST INDUSTRIES
BSE CODE: 508906 | Volume: 954 |CMP: Rs 208

With an order book of Rs 160 crore, Everest Industries is poised to witness a better revenue generation going forward. The company is the fourth largest player in the organised fibre cement-roofing industry. Everest Industries currently has a market share of around 13 per cent. The company has planned for a capital expenditure of Rs 50 crore over the next couple of years.

Everest Industries is believed to generate free cash flows going forward. It is setting up a 0.1 million tonne ACS plant at Balasore, Odisha. The plant is slated to become operational by the first quarter of the present fiscal which will in turn take the total capacity of the company to 810000 TPA. The full financial impact generated from this plant will be visible in FY14. What acts as an icing on the cake is the strong network of its 6000 retail points present on a pan India basis. One can look at the stock from a medium-term perspective.