Aashish Tater's 2 multibaggers to fetch you good returns

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Aashish Tater's 2 multibaggers to fetch you good returns

In an interview with CNBC-TV18, Aashish Tater, Head of Research at Fort Share Broking gives his views on select multibaggers.

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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 AP Paper Mills BSE | NSE 31/05/12 Are Mutual Funds betting on AP Paper Mills? Other Stocks in this news Kokuyo Camlin |

In an interview with CNBC-TV18, Aashish Tater, Head of Research at Fort Share Broking gives his views on select multibaggers like AP Paper.

Below is an edited transcript. Watch the accompanying video for more.

On AP Paper :

AP Paper International paper offered Rs 540 mark for the stock. If I take the same model, the stock can go and test Rs 135-140 mark on downside. This is a balance sheet clean up plus a small adjustment because now the foreign promoter and the company are in better hands. We feel the worst would be in the offing very soon. If I take a staggered purchase approach I would say that Rs 140-130 is on the downside.

What I will look into is what the percentage amount is as 75% is controlled by the foreign promoter. So from a two-and-half year perspective, even if I take a call that, yes, they have paid their value after doing good due diligence, the stock should be fairly valued somewhere around Rs 350 to Rs 400 and if I take a call from the marketcap to sales ratio, this is one company where most of the work is into the price and with another 15-20% because of the market carnage this will definitely warrant a buy.

So someone who is looking to build a portfolio from two-and-half to three years perspective and wants a very safe stock in this category, one company that fits the criteria from Rs 140-165 mark for a staggered purchase approach is AP Paper.

On Camlin :

Going through the same logic for AP Paper and Lumax we found Camlin is available right now at 33% of what the foreign promoter actually offered for the company. By the same multiple, 15-25% on a conservative side the stock could go and test Rs 26 to Rs 28 mark, which would definitely warrant a buy from a longer-term perspective. Now the company on a joint venture basis is targeting sales of approximately Rs 1,000 crore within four years that is roughly two-and-half times its current sales.

Here is a company where the balance sheet clean up is done, there is almost everything from the foreign promoter, including, all the technological expertise they are going to integrate their operational strength with the company's strength. What the promoter bid for 54% odd levels of the total marketcap right now is available for 30%. That means from a longer-term perspective, if someone buys this particular stock and accumulates it in the zone of Rs 20 to Rs 30 it is a difficult call right now as to where will be the stoppage for the stock.

If someone is patient and acquires small quantities on regular intervals he will make quite good amount of money. Ranbaxy was paid Rs 737 tested Rs 180 and is now available at the Rs 500 odd mark. So this is what happens. The worst is already priced in. The stock goes and tests and then the fundamental value emerges. From here where the investor who has got patience and has a longer timeframe he has hardly anything to lose but has got good fortune because the insider himself is paying very high premium valuation because they know what they will do with the company in the longer timeframe.

From both perspectives, this definitely warrants a staggered purchase approach from a longer-term perspective to get decent returns of 30-35% year on year. Do not go and invest for immediate gains. I don't think this will stop even at current levels. On dips this is definite a buy from our side.