Positive on specialty chemicals; expect double-digit RoE for CONCOR by FY23: Nirmal Bang’s Rahul Arora

Arora is also looking at doubling of profits in Rossari Biotech, Camlin Fine Sciences, and Fine Organics in the next 2 years. He also expects a 250-300 basis points margin expansion.

He is also positive on CONCOR. He is expecting a double-digit RoE by FY23 and margin expansion of 150-200 basis points.

“We are expecting the railway freight market share, which is currently at about 28-29 percent for CONCOR, to edge up to the mid-40s. It is not the cheapest company, but it is one of the premium PSU companies that you have, going around. It is a very capital intensive business, in the last few years it hasn’t done a double-digit RoE, but our call is that by FY23 this will become a double-digit RoE company and that is where you will see the valuation rerating happening for this company,” he said.

According to Arora, within the technology space, the focus is shifting back towards the largecaps. He is positive on HCL Technologies and Tech Mahindra.

“The kind of moves that we have seen in the midcap IT companies, I think over the next 9 months if you are taking 2021 as the benchmark, the focus might shift back to the largecap names. If you look at names like HCL Technologies or Tech Mahindra, from here I think there is scope for them to even outperform something like TCS and Infosys from a stock market perspective,” he said.

He also believes that 2021 could be a range bound year for the market. “I think this is going to be a range bound year for the market. I think 14,000 on the way down to about 15,500 on the way up -- you are going to have some ferocious moves on either side. This could probably be the year where you have 150-200 point intraday moves on the Nifty because the market has pretty much discounted FY23 earnings -- that has rolled over to that effect,” he said.