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Talking about midcap ideas that could turn out to be multibaggers in the medium-term, Investment Analyst Sanjay Chabria said Rajasthan Spinning, who are the leading manufacturers of synthetic yarn and fabrics in the country, are currently undergoing a capacity expansion programme.
Talking about midcap ideas that could turn out to be multibaggers in the medium-term, Investment AnalystSanjay Chabria said Rajasthan Spinning, who are the leading manufacturers of synthetic yarn and fabrics in the country, are currently undergoing a capacity expansion programme.
Meanwhile, DIC India, which is the world leader in printing, organic pigments and thermosetting resins, enjoys a 33% market share.
Chevoit , he said, is a leading manufacture and exporter of fine jute yarn. Their total investment and cash amounts to around Rs 100 crore as against the company's market cap of Rs 105 crore he added.
Excerpts from CNBC-TV18's exclusive interview with Sanjay Chabria:
Q: Walk us through Rajasthan Spinning and the target that you have on this stock at this juncture?
A: The new name of Rajasthan Spinning is RSWM. It is a part of the LNJ Bhilwara Group. It's the leading manufacturer of synthetic yarn and fabrics in the country. The company has a well-established fabric brand, Mayur Suiting, in the domestic market.
It is currently undergoing a capacity expansion plan for which it will be investing Rs 900 crore on all its plans till FY09. The investment plan includes setting up of a 46 mw thermo power plant, denim production unit, garment initiative, and various expansion and modernization plans for the yarn business.
Once these plants are commissioned, RSWM's total spindles will increase from 3,80,000 to about 5,00,000 in the next 12-15 months.
Q: What's the target on this one?
A: We have a target of around 40-50% upside from current levels. The company's operating margins will get a good boost after the thermal power plant goes on stream in the next two months.
Q: How long would you take to achieve that target?
A: We will achieve them in the next six to eight months because the current valuations are very cheap.
Q: Why do you like DIC India and what's the price target on that?
A: DIC India, erstwhile Coates of India, again has got a good pedigree. It is a 65.8% subsidiary of DIC Asia Pacific Pvt, Singapore. This in turn is a wholly owned subsidiary of the USD 9 billion Japanese group, Dainippon Ink & Chemicals, or DIC. It's the world leader in printing, organic pigments and thermosetting resins.
DIC India enjoys a strong market position. It has a 33% market share in the Rs 1,500 crore printing and liquiding market.
Q: You have a target on this?
A: The company has came out with good results for Q1 ended March 2007. It posted a 28% rise in sales to Rs 90 crore whereas net profit increased 57% to Rs 2 crore.
In calendar year 2006, revenues grew 20% to Rs 375 crore whereas net profit increased 21% to Rs 14.8 crore.
On a very small equity of 6.89 crore, the consolidated EPS stood at 21.5 and the dividend declared was 35%.
Q: What is the price target on Cheviot?
A: Cheviot is a very old company, which was incorporated in 1897. The company is a recognized export house and one of the leading manufacturers and exporters of fine jute yarn and industrial fabrics.
The company continues to operate through two-business segments - jute goods and captive power generation. The captive power generation doesn't account for more than 10% of total revenue.
Q: The target on this one?
A: The company's market cap is around Rs 105 crore. It holds investment worth Rs 50 crore for various urgent liquid funds. It has investments in blue chips stocks valued at Rs 45 crore.
The total investment and cash comes to around Rs 100 crore against the company's market cap of Rs 105 crore. The company is valued at just Rs 5 crore.
Talking about midcap ideas that could turn out to be multibaggers in the medium-term, 
