Aashish Tater's multi-baggers: Surya Roshni, Munjal Showa

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Aashish Tater's multi-baggers: Surya Roshni, Munjal Showa

Aashish Tater, Head of Research, Fort Share Broking sees Surya Roshni and Munjal Showa fetching good returns ahead.

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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 Surya Roshni BSE | NSE 31/05/12 Are Mutual Funds betting on Surya Roshni? Other Stocks in this news Munjal Showa | Atlas Cycle Industries |

Aashish Tater, Head of Research, Fort Share Broking sees Surya Roshni and Munjal Showa fetching good returns ahead.

"Surya Roshni is a good stock in terms of dividend history. They haven't missed a single dividend for the last 21 years. The technicals are pointing out, the downside risk to the stock is around Rs 57-58. The stock will bottom out very soon."

"Munjal Showa is a buy at current levels. It is buy on dips from a longer-term perspective of two years with a target of close to Rs 122-140."

Below is the edited transcript of his interview with Udayan Mukherjee and Mitali Mukherjee of CNBC-TV18. Also watch the accompanying video.

On Surya Roshni

Surya Roshni is our pick because of its marketcap to sales ratio. We gave a similar recommendation for Atlas Cycles . It gave almost 80-100% return in no time. I don't think Surya Roshni will have the same fortune as Atlas Cycle but the downside from here on is locked.

Technically, the stock is into disastrous selling mode breaching all its support levels. But, the promoters of the company have converted warrants even at Rs 111 level. This triggered and open offer at Rs 111 where only 6% of 20% got subscribed. This means people were not willing to sell even at Rs 111. This may be because of  their real estate story.

They have land bank in BahadurGargh which the management wanted to monetise it sometime back, but nothing happened. The promoters converted their warrants into equity. So, there might be a catch that this particular land bank can fetch them much more than their conversion price.

In terms of current valuation, the company is expected to do a sales of Rs 3300 crore and market cap of Rs 277 crore on the conservative side. Even if they do 2% net profit margin and there is no sign of improvement going forward, they will still their consolidated PAT would come around Rs 65-70 crore. That would mean a PE of less than 5.5 times going forward.

Thirdly, what has to see what happens once this particular land bank story materialises. Taking a quant call, the stock has always been a performer near Diwali time. It peaks out for the year at that time. So, if someone wants to invest 500 shares, he can easily bookout 200-250 shares somewhere near Diwali. I am expecting a price of close to Rs 85 levels during that time and forget the rest from a longer-term perspective.

This stock will hog limelight and is a good stock in terms of dividend history. They haven't missed a single dividend for the last 21 years. The technicals are pointing out, the downside risk is around Rs 57-58 levels. The stock will bottom out very soon.

On Munjal Showa

This was one of the stock which was in the safe bet list this year and it continues to remain so from my side. We recommended this stock at Rs 50-52 levels and even at current level the stock's downside is capped. The company has three plants at Manesar, Gurgoan and Haridwar. All these three plants are capable enough to meet its current demand. The management pointed out, they would slowly expand the capacity of 6-7% (Y-o-Y) from next year.

For this particular fiscal, we expect a 25% jump in topline and similar result could be seen in terms of net profit margin. Their margins have stabilised and for Q1 the company has done Rs 3.95 EPS. Hero Honda Group splitted into Hero Corp and Honda. Hero Corp pointed out that they would be targeting aggressive sales with new models. Given the parentage is Munjal, the order would directly flow to both Munjal Showa and Munjal Auto. So, there is limited downside risk.

The company has been very investor friendly in terms of dividend. They have increased their dividend from Rs 2 - Rs 2.5. Considering all this, this is a buy at current levels. It is buy on dips from a longer-term perspective of two years with a target of close to Rs 122-140. This kind of stock trades at 5 to 14 times PE multiple given the scenario of the market. We have taken median average of seven times. So, if a PE multiple of seven times is assigned from two years perspective, in next 18 months it can test Rs 120-140 mark.

Disclosure: We have recommended the stocks to our clients and firm might also have positions. No personal holding in the said stocks