Check out: SP Tulian's multi baggers for your portfolio

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Check out: SP Tulian's multi baggers for your portfolio

SP Tulsian of sptulsian.com gives his views on two stocks, BEML and Asian Hotels West.

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SP Tulsian of sptulsian.com gives his views on two stocks, BEML and Asian Hotels West.

BEML

I recommend this stock purely on its valuation. If you see their Mini Ratna public sector unit, they have three divisions; mainly mining and constructions, defense and the rail and metro coaches and all three have good growth potential in the coming times. Performance wise, the company posted a topline of Rs 2600 crore for FY11, with EPS of Rs 36. If you see the first quarter performance also, the EPS is Rs 4 but it has shown a mild growth when compared to the corresponding quarter of the previous years. This is because the company has always had its revenue and income flow in the last quarter and that has been the trend for quite some time.

If you see, the stock has corrected from about Rs 1200, which is its 52 week high, to about Rs 450. Yesterday we have seen some buying in the stock which has made it to move to Rs 470. But the book value of the stock is Rs 500.

So I think this is a very good investment call. One can buy this stock during such a fall, when there is no buying interest because I don't see any concerns with the stock, its order, or its business model. They have nine manufacturing units scattered all over and they are sitting on good order flow. So taking all this into consideration, I really like the stock. I think it has potential to give about 40% return in next 12 months or so.

Asian Hotels West

This hotel hold the Hyatt Regency property which is near the Sahar Airport in Mumbai. Also, they are holding 50.5% in a 130 room boutique hotel in Bangalore. In fact they recently increased their stake in this hotel just a couple of months back from 32% to 50% plus. So now it has become a subsidiary and the company is qualified to consolidate the accounts.

Apart from that, they are setting up a new hotel in Delhi with 523 keys. This hotel in Delhi is being set up with IDFC in a joint venture, where IDFC holds 34% stake. The total project cost of the Delhi hotel is Rs 700 crore plus.

Apart from that, the marketcap of the company is just Rs 170 crore and even if you add the debt of Rs 200 crore, it works out to about Rs 353-370 crore. Part of that must have been utilized for the new property as well. But even if I apportion the enterprise value for these two properties, I think this makes the stock quite cheap. The hotel has posted an EPS of Rs 14 for FY11.

The group has seen the recent restructuring into three parts, Asian Hotels West, North and East. This company has been declaring good dividends of 40% last year and if you focus on Delhi, Bangalore, and Mumbai, that can really qualify as a very good hotel stock.

The stock looks to have corrected a lot, but there doesn't seem to be much downside from here on. If the renewed interest comes back into the stock, we can quickly see it moving close to about Rs 200.

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