*I*nvestment Analyst and author of Hidden Gems Ashish Chugh is bullish on IL&FS Investment Managers<http://www.moneycontrol.com/india/stockpricequote/finance-investments/ilandfs-investment-managers/ILF02> and GVK Power & Infrastructure<http://www.moneycontrol.com/india/stockpricequote/power-generationdistribution/gvk-powerinfrastructure/GVK> . He believes both these stocks have the potential to fetch good returns in times to come.
*Below is the edited transcript of Ashish Chugh’s interview with CNBC-TV18* *IL&FS Investment Managers* IL&FS Investment Managers is a part of IL&FS group. This is the only listed private equity firm in the country. The company manages money for foreign investors typically on a 220 basis wherein it gets a fixed return of about two percent of the amount of funds managed. Also, there is a performance linked incentive of between 15-20 percent based upon the kind of returns which they generate for the investors after certain threshold. This company has been managing assets of close to about USD 3.2 billion and for the past couple of years it has been giving a consistent return of about 25 percent on the funds managed. If we look at the financials of the company, FY12 sales were about Rs 220 crore. Profit after tax was about Rs 75 crore. In the first nine months of the current financial year, sales are almost flat at Rs 163 crore which was same as the same period last year. Profit after tax is up by about 2.5 percent to Rs 55 crore. This company has been distributing roughly 40 percent of its profit after tax to the shareholders as dividend. It has been giving a dividend of 75 percent each year for the past three-four years. The company has a board meeting on 30th April for financial results and also declaration of dividend. So I believe that they may continue with a dividend of 75 percent or dividend of Rs 1.50 on a stock of about Rs 20 which means a dividend yield of close to 7.5 percent. On a long term basis, the performance of the company is a function of two things. One is the ability of the company to get fresh funds from the management and also the ability of the company to deliver returns to the investors. In the past few years, I think the investment environment has been extremely tough and still this company has managed a profit of Rs 70-75 crore, paid 40 percent profit to the shareholders as dividend. This translates into a dividend yield of about 7.5 percent on the current market price. I think as the economic environment improves and as the profits of the company improves, I think investors can expect better returns in the future. So here, I am basically betting on the pedigree of the management which IL&FS, I would say is an excellent pedigree. It has been a consistently performing company and the best part is that at the current market price, this company offers a dividend yield of 7.5 percent which in the current environment I would feel is an extremely good dividend yield. I would say this maybe a safe investment for investors who don’t want to take too much risk in the stock market. *Disclosure: Ashish Chugh and his family have investments in both the companies.* -- CA. Rajesh Desai -- You received this message because you are subscribed to the Google Groups ""GLOBAL SPECULATORS"" group. To unsubscribe from this group and stop receiving emails from it, send an email to [email protected]. To post to this group, send email to [email protected]. Visit this group at http://groups.google.com/group/globalspeculators?hl=en. For more options, visit https://groups.google.com/groups/opt_out.
