ET Now: If you can share your thoughts on the Nifty as well as your wealth creation idea?
G Chokkalingam: I firmly believe that the year 2016 would be very good for the market. However, in the first six months, midcap stocks would continue to outperform larger peers. That is why I have picked up two mid-sized companies. I believe both of them are great value picks. One of them is Chembond Chemicals. It is a Maharashtra-based specialty chemical company. I believe Chembond Chemicals is an emerging stock in the speciality chemical company business. The company had a joint venture (JV) with Henkel. The investment was hardly about Rs 45 lakh.
It sold that investment it for about Rs 175 crore. Now the company is sitting on cash, which is 50 per cent of the company's market capitalisation. The company has already floated six JVs and those subsidiaries all are into various segment of specialty chemicals. It has a good management. The company has been paying dividend consistently for last 17 years. The company is engaged in water chemicals and animal health food. There are so many other specialty chemical segments that it is engaged in. I believe considering the fact that it also clocks very high margin to the extent of 30 per cent, it can grow its profits substantially going ahead. Therefore, I would suggest this stock to retail investors.
The second idea is IMPA (India Motors Parts). It is a part of TVS group. This is again a solid wealth-creator. From the lows of 2008, it has created market cap of ten-fold. It is paying dividend consistently for several decades. It placed dividend in the range of 70-140 per cent. The most important thing about the company is that it has got investments in Sundaram Finance. It has got a lot of cash; it is a zero-debt company. It also invested investment in Sundaram Insurance general insurance. The value of these investments alone is more than the current enterprise value (EV) of the company. In fact they are at 20 per cent discount. Therefore, I believeit has got a lot of potential to unlock going forward.
In Video: Wealth creation ideas by G Chokkalingam
