1). Just dial (current price: 693, market cap: 4800 crore)
)- Very effective localized search engine (try it).
)- Survived and flourished in voice, mobile and desktop internet regimes.
)- Well aligned/incentivised sales force (everyone from the call center lady down to the marketing guy gets a cut of continuing business from a paid listing)
)- Paid listing still 3% of the total listings, so room for growth.
)- Multiple may look expensive (40+ P/E), but size of the opportunity is huge and market cap is not huge. Mobile internet is on the verge of exponential growth as data penetration increases. Lack of alternative plays in Indian internet space will benefit Just dial. Can potentially be non-linear growth story.
)- Negative working capital and a net cash balance sheet.
2). Info edge (current price: 318, market cap: 3500 crore)
**)- **Everyone sees it as a unidimensional job classified website. It is much more than that.
)- It has great set of leading internet franchises – Naukri (#1), Jeevansaathi (#2), 99acres (#1), Zomato (#1) etc to name a few. Despite sales growing 2x in last 3 years, the stock has basically been flat given current dominance of Naukri in revenues (~80%) - which is being affected by macro. Management is investing for growth and so earnings and margin profile is not great, yet.
)- Nevertheless, the business is net cash, and generates cash flow every year (normalized for growth investments).
)- Again, market cap is tiny for a leading bouquet of internet franchises – in a sector that is about to see a non-linear growth.
)- History has shown that internet franchises are often a land grab and winner take all game, so having #1/#2 assets is invaluable.
)- Again, multiple at 30x+ may look expensive, but in small, scalable opportunities one should focus on market caps as much as multiples. Market cap is tiny, in my view.
3). Sun Pharma (current price: 1108)
)- great management which is able to go up the demandin-elasticitycurve by progressively raising prices. It is able to do this as it focuses on niche segments, with limited competition.
)- It has to be seen not in conventional multiple terms - where it will always look expensive - but as a portfolio of out of money call options. It was Taro for the past year and will be DUSA/URL this and next. Beyond that it could be M&A given its Net cash balance sheet.
4). Supreme Industries (Current price: 374)
)- Well covered in this forum. Leader in its segment, with good capacity expansion driven volume growth ahead. Essentially a staple category, available at commodity multiples. Offers both earnings and multiple led returns. Potentially, a 1000 rs stock in 3 years.
5). Bajaj Finserv (Current price: 643)
)- Arguably the best life and general insurer in the country. Best capitalized and never needed equity infusions from promoters in the last 8 years unlike other private/public peers. Industry going through a tough patch due to regulations and macro. Also, owns a good NBFC and can potentially get a banking license.At current price, you get the best life insurance business in India for free, practically. Multiple is 5-6x. Potentially, a 5-6 bagger in 3-4 years.