Tater's top picks: Cash on Fedders Lloyd, Bharat Bijlee

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Tater's top picks: Cash on Fedders Lloyd, Bharat Bijlee

Aashish Tater, head of research of Fort Share Broking joins CNBC-TV18 to take his pick of multibagger stocks. He sees Fedders Lloyd and Bharat Bijlee having the potential to fetch better returns ahead.

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Aashish Tater, head of research of Fort Share Broking joins CNBC-TV18 to take his pick of multibagger stocks. He sees Fedders Lloyd and Bharat Bijlee having the potential to fetch better returns ahead.

Below is the edited transcript of his comments. Also watch the accompanying video.

On Fedders Lloyd

We try to give a quantitative call on Fedders Lloyd. A quantitative call is - the stock goes and retraces at particular levels. Last time this stock was recommended around Rs 78 mark with a target of close to Rs 97-99. Once the stock tested those it tumbled down. The logic behind this particular recommendation is, it goes up by certain percentage, it falls and retraces back to certain levels.

Going through the simulators, it predicts that the stock should test Rs 53-55 mark, which is roughly Rs 18-20 downside from current levels. That would be the right level to enter from six to eight months perspective. Fedders Lloyd normally hogs limelight sometimes in quarter one of every year and this is because of summers.

The company has been doing well in refrigeration business and has entered other white good segment. They have been marketing aggressively and there is lot of cushion in terms of valuation perspective. If we combine fundamental and one enters at Rs 55 mark then he would be buying a company into a space at 0.25 market cap to sales ratio from one year's perspective.

Once that story builds up for the white good segment sometime in April-June segment, we have a target of close to Rs 84.80 as per our predictor model. If that predictor model goes well then one would be making almost 60% from the dip that we are suggesting and entry point. This is not a stock where one would be taking a huge position.

Buy a small quantity and take that risk and get 50-60% returns. If this happens it's very good otherwise one would be stuck in the range of Rs 60-65 or Rs 70 from a year's perspective. One will be in a win-win situation either with 30% gain or with 60% gain from a year's perspective.

On Bharat Bijlee

I would like to give some highlight for Bharat Bijlee's quarter one performance. The company has posted an EPS of Rs 48. This is because the company has shown an extraordinary income of close to Rs 26 crore. That means net-net the company has underperformed its last Q1 result.

Thus, we feel that with the Q2 announcement people will be disappointed. Then the stock should tank to Rs 620-640 mark where we suggest to be an investor into a company from a longer term perspective. This will give a dividend of Rs 25 year-on-year. For next year we have a target of close to Rs 32 in terms of dividend for this stock.

With this extraordinary income, we feel they might have tended a part of the share of Siemens Holding in the open offer recently concluded by Siemens AG. From a balance sheet perspective, the company now has a market cap of close to Rs 400 crore of which Rs 240 crore is invested into blue chip companies like ICICI, Hind Oil, HDFC and Siemens. I take a 60% value of the market cap then it would be roughly around Rs 150 crore odd.

They are sitting on handsome cash of close to Rs 25 crore after Q1 and they hold Rs 18-20 crore of mutual fund also. If I reduce all these aspects, the company is available at around Rs 180 crore. There are two things to watch out for. Firstly, people would be disappointed after Q2 results and then the stock would tank to Rs 620-640 odd mark where from a PE multiple perspective the residual business will be available close to 4.5-5 times.

They can expand their PE to 15-16 odd times once these business come into limelight. Bharat Bijlee would be an outperformer again. If one wants to take an investment call then let it relax to Rs 620-640 mark. One can then take a call from longer term perspective for Rs 1,000 plus target from two and a half years perspective.

Disclosure: We have firm-wide interest in the stocks discussed but no personal position.