Prime Stock Recommendation: A consumer electric stock that’s ready to light up!
This consumer electric stock is well placed to ride the pick-up in the sector and more!
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8 thoughts on “Prime Stock Recommendation: A consumer electric stock that’s ready to light up!”
Hi Pavithra,
Apologies. I beg to disagree on margin of safety here on below counts:
– Highly competitive business with margins 10% or less
– Management in transition
– Valuations at 76 PE sounds very excessive for a commodity like fans business with lack of differentiating factors
– Competition from new players like Atomberg is another factor disrupting the space
– Also, business can be prone to technological changes e.g. lighting.
Let’s see how this plays out.
Thanks,
Anand
Hello Sir,
Thanks for the comment. Ours is a tactical call that hinges on margin expansion and the new management taking off. All of the points you have mentioned are risks to our recommendation.
But completely respect your views.
Best,
Pavithra
Can we invest in this stock via SIP
Hello,
We do not recommend the SIP route to stock investing. You can refer to this article for more insights on why we don’t recommend this.
Thanks
My question in terms of SIP was whether the stock price will be in a range so that we can accumulate the stocks in next 2-3 Quarters. for e.g. You recommended Godrej agrovet at 580 and it touched 800 in a month and it has already rallied 20%..
Thanks for clarifying Sir. No this stock is not suited for that. It is a tactical call.
When the company is expected to grow only in single digits and also there is no significant pricing power are we not paying up too much ? Is there any margin of safety at this price?
Hello Sir,
While it is true that the sectors are only expected to grow in single digits, a combination of factors gives us confidence in OEL.
1. OEL is targeting a higher growth rate for its revenue than the sector. This is backed by the capex that it has undertaken.
2. Levers have also been put in place for margin expansion and this is also aided by the sector tailwinds
3. We also view the CEO transition favourably.
Due to the above, margin of safety is favourable.
Comments are closed.