Check out: Aashish Tater's muti-bagger picks for today

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Check out: Aashish Tater's muti-bagger picks for today

India Inc is a witnessing slowdown, with the ongoing economic uncertainty owing to lack of govenment reforms on rising interest rates and inflation hurting growth. Picking stocks in such a volatile and uncertain market can be a tricky business.

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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 Archies BSE | NSE 31/05/12 Are Mutual Funds betting on Archies? Other Stocks in this news Bombay Dyeing and Manufacturing Company |

India Inc is witnessing a slowdown in earnings, with the ongoing economic uncertainty owing to lack of govenment reforms on rising interest rates and inflation hurting growth. Picking stocks in such a volatile and uncertain market can be a tricky business. Aashish Tater, Head of Research at Fort Share Broking, in an interview with CNBC-TV18's Udayan Mukherjee and Mitali Mukherjee, cherry-picks  Archies and  Bombay Dyeing , which he believes will be multi-baggers.

Below is the verbatim transcript of his interview. Also watch the accompanying video.

Q: Is Archies one of your picks for today?

A: I am tracking this stock right from the time I entered market. I have always said buy near Valentine's Day and sell on Feb 14 or just a day before. However, now the theme has changed, and people are focusing on retail stories. This story is drastically undervalued compared to its potential. Taking a call on Archies itself, it controls 60% of the market share in the expression card segments. It's not only restricted to this space but other businesses like gifting, etc. Recently, the company tied-up with Hallmark and they would now be jointly opening stores in next few years. This year itself they would be opening 12 Hallmark stores which would be managed by Archies in this particular tie-up.

Taking a call from Hallmark's perspective, they have got merchandise rights for Snoopy and Garfield products which are very popular among kids. So, there is a lot of visibility in that sense. Also, considering the number of franchises and exclusive outlets owned by Archies brand, it's close to 195 exclusive outlets and close to 300 franchises across India. These exclusive outlets are spread across 57 cities, almost 14 states and there is lot of potential in terms of taking it forward. So the inclusion of Hallmark tie-up plus there would be access to those exclusive merchandise rights, I believe this stock definitely warrants re-rating. I am not taking a call in terms of valuation because right now the stock is available at 13-14 times its PE value. So, there will be a PE rerating given its visibility. On a marketcap of 140 crore odd, this counter is one safe bet that people can look in terms of consumption and brand building theme that we are focusing on.

Did you miss the brokerage call on RIL, Sterlite and Bank of India post earnings?

Q: What is your view on Bombay Dyeing , that is, the other stock picked for us today?

A: Bombay Dyeing is another safe stock in the real estate sector. This counter may give at least 40-50% return from two years perspective. People rush and feel that playing with NAV on daily basis would give returns on Bombay Dyeing stock. This view is the problematic factor problem for people who have averaged right from Rs 700 to Rs 500 odd mark, and they have got to stick with the stock.

If I had to take a call on the stock, which has a very heavy asset balance sheet items that it is carrying, they own two lands: one in Wadala and another in Worli. These lands have 999 years leasing agreement with the state government. Now these two lands combined together have a capacity to develop almost 9 million sq ft both commercial and residential projects, which would be developed over next 7-8 years.

On the free cash flow to equity adjusting for the debt, not taking into account their textile business, this valuation roughly works out to be around Rs 10,000 crore. Now take that Rs 1,600 crore, you get Rs 8,400 crore in terms of free cash flow to equity on conservative side from next six and a half years. The current marketcap of the company is Rs 1,600 crore. So in seven years a company would generate 6 times its free cash flow to equity. The net asset value is getting discounted close to 32%. Also, if I take a conservative call and try to take a DCF model into it and assign that 20-21% because real estate right is not a theme that people like, the stock deserves a valuation of close to Rs 550 level per share.

In terms of their core business, they have shifted their factory from Wadala to nearby region of Pune. And, if I take a 50% valuation of the stock in terms of polyester and other things, then, Rs 120 is the conservative side in terms of business valuation for the core business. So Rs 675 to Rs 700 from three years perspective. One who wants to take a portfolio bet and is comfortable in getting 20-25% return, this is one stock which should be definitely a portfolio bet from a very longer-term perspective. And, every time there is a spike of 30% odd levels, in no time one can definitely book some partial profit and move on to some other interesting stories.