Aashish Tater suggest 2 multi-baggers for handsome returns

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Aashish Tater suggest 2 multi-baggers for handsome returns

Aashish Tater of Fort Share Broking, in a discussion with CNBC-TV18's Udayan Mukherjee and Mitali Mukherjee, shared his views on a few of these stocks from midcap space like Timex and Alfa Laval.

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Excerpts from Bazaar on CNBC-TV18 Watch the full show » ALSO READ See what other experts are saying about markets See what FIIs are saying about the markets See what Udayan Mukherjee is saying about the markets Timex Group Ind BSE | NSE 01/01/70 Are Mutual Funds betting on Timex Group Ind? Other Stocks in this news Alfa Laval (India) | La Opala RG | Atlas Cycle Industries | Gujarat Fluorochemicals |

Due to RBI's surprise rate hike of 50 basis points (bps) in repo and reverse repo, the interest cost on midcap companies have gone up almost 20%, causing threat to their growth.

Aashish Tater of Fort Share Broking, in a discussion with CNBC-TV18's Udayan Mukherjee and Mitali Mukherjee, shared his views on a few of these stocks from midcap space like Timex and Alfa Laval .

He said, "The quality stocks have been rerated from January 2011 till date. Few of these stocks have given 100% returns and others like La Opala , Atlas Cycles and Gujarat Fluorochemicals have fulfilled the guidelines set by the house."

Tater feels that the possibility for PE expansion might be under threat. Even if the companies post good results, the growth would be muted going forward, he added.

Here is Tater's analysis on his top picks.

On Timex

Timex has tremendous potential going forward. It has 11 brands like Versace, GUESS, GC and many more as flagship brands. The company right now is available around Rs 450 crore market cap. It is a T to T (Trade to Trade) stock. There isn't immediate hurry to invest into this stock in huge quantity, but one should look from a longer-term perspective.

For the last year, the company had given a growth of 25% in terms of topline and bottomline. Parents of foreign companies get interested into their subsidiaries, once the growth momentum starts coming up and Timex is the exact proxy. Timex Corp of USA will definitely focus into a strategy going forward and invest further into the company.

The company's parents own almost 75% and 5-7% is owned by strong hands. There is hardly any float. The earning for Timex in the next two years would double from here in terms of EPS. This stock is a portfolio bet from a longer-term perspective. There is hardly anything to loose on downside.

On Alfa Laval

Alfa Laval was one of our top bets in terms of delisting. The parent is buying companies across the globe at an annualised equivalent value of less than 11%. The stock was trading at 17% and got rerated from Rs 1,100 to Rs 1,600. We had an upper band target of Rs 1,800 and Rs 1,600 for last fiscal. The numbers posted yesterday are beautiful in terms of topline and bottomline.

On the other hand, Alfa Laval recently has given an order book update of 32% year-on-year (YoY). The growth in terms of topline would be close to 40-45%. There would be an input pressure and the company would do around 25-28% in terms of bottomline. For this fiscal, the company would do close to Rs 77-78.

If I take a call on the parent's recent acquisition Aalborg Industries, they have paid an annualised equivalent value of close to 11.5-12%. This means that the parent is still buying companies aggressively across the globe at the same valuation.

If delisting news on this particular stock comes up this year, the stock would test Rs 2,158 as per my probabilistic model. If it doesn't, it has been trading at 18.5 times forward multiple when the parent itself has acquired close to 19 times forward across the globe. This stock is very comfortable in terms of dividends. It recently paid a good dividend. Going forward even if it is not delisted, it will give returns year after year.

We had a target of Rs 1,400 for AkzoNobel from three years perspective. It has given 50% return in just seven months. People can make more returns by investing small quantity than chasing these stocks in quantum.

Disclosure: The stocks mentioned above have been recommended to our clients and firm might also have positions. There are no personal holding in the said stocks.