Find out: Tulsian's views on Tata Coffee, Nitco and more

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 Bayer Cropscien BSE | NSE 30/05/12 Are Mutual Funds betting on Bayer Cropscien? Other Stocks in this news Nitco | Tata Coffee | Shree Renuka Sugars | Acropetal Technologies | Gokaldas Exports |

SP Tulsian of sptulsian.com, in an interview on CNBC-TV18 gave some of his multibagger ideas for investors. Stocks and sectors he has looked at are Bayer CropScience , Nitco Tiles , Tata Coffee , Acropetal Technology , sugar sector, cement sector and Gokaldas Exports .

Below is a verbatim transcript of his views with CNBC-TV18's Udayan Mukherjee and Mitali Mukherjee. For complete details watch the accompanying video.

Q: Give us your take on Bayer CropScience?

A: Bayer CropScience is a multinational company engaged in making agro, pharmaceutical and material science products. If you see the performance of the company in the last nine months, it has surpassed the performance what has been achieved for whole of FY10 with a topline at Rs 1,920 crore with PAT of Rs 148 crore. For the whole of FY10, it was at Rs 1,750 crore with PAT of about Rs 127 crore.

The company likely to sell its 108 acre property at Thane for about Rs 1,400 crore because that has been on the block for quite sometime but they have been trying to get better valuations. With MNCs, we have always seen that whenever they have this kind of realization from sale of assets, practically, the entire amount gets used to distribute the dividend because the promoters are holding 71% stake in the company. They want to be the largest beneficiary and take away that money.

It is not the case in Indian companies where we see assets sold and the entire cash is retained by the company. That windfall of about Rs 200 per share in the form of dividend can be given. With their PAT at Rs 148 crore that translates overall to Rs 50 EPS for FY11.

Agrochemical is a hot space where the profitability is continuously on an increase, which we have seen in case of FY11. It is showing an upside of about 40%. Taking all this into consideration, with an EPS of 50 and share now ruling at close to Rs 800, it translates into a historic P/E multiple of 16. While these companies are always carrying a higher P/E close to about 18-20 times and if you knock off the expected because land sell is likely to happen soon, so, if you knock off about 150-200 for this dividend distribution the share looks quite attractive and is capable of giving a return of 25% on an annual basis with a very limited downside.

Q: What about Nitco Tiles. Where do you think that stock could go?

A: Nitco Tiles had a very tough FY10. They had a topline of Rs 465 crore with net loss of about Rs 8.7 crore, largely because investigations were carried out by Directorate of Revenue Intelligence and the promoter of the company was also away from the country. The business of the company is quite strong, they have a very strong brand recall value of vitrified floor tiles and marbles but the present side, the involvement of the promoter is very much desired.

Now all these problems seem to have been settled. If you see the performance of the first three quarters of the company, the profitability is continuously on a rise. For nine months, the company has posted a topline of close to Rs 465 crore with PAT of about more than Rs 15 crore. The book value of the company is close to about Rs 160-170. So price to book is about 0.35 and P/E multiple is close to about 8 to 9.

The company is likely to do quite well for FY12 and I won't be surprised to see the share ruling at a P/E multiple of close to 6-7 times. Taking all those into consideration the downside seems very limited. If someone can keep a view of about one year, can see a price of Rs 90 but maybe in the shorter-term in next three-four months, the share should move to Rs 70-72.

Q: Sugar prices have crashed overnight globally and it seems the government may not easily go ahead with the exports as was expected. How would you approach this sector?

A: Except for Renuka Sugar , I don't think anyone is largely affected by the crash in the global prices because we have a Chinese wall between the domestic realisation and the global realisation. Definitely, the fall of this global commodity prices will have an impact on the share price of Renuka Sugar. If you see the domestic scenario, government is right in not allowing exports because we are likely to see the drop in production.

I don't think that production is likely to surpass 24 million tonne. This could be my view maybe at about 23.5 million tonne because we have been seeing lower recovery in UP, lower crushing quantity in Maharashtra, so the government will definitely not be taking a chance. We have the domestic consumption of 23 million tonne. A couple of days back we saw that the government had released a higher levy quota for sugar. So definitely they want to keep the price under check.

The UP mills are selling sugar. If you take the sugar standalone, they are not even recovering the cost though they are trying to recover it from the byproduct. Taking all this into consideration, I don't think there is much excitement. The price is not likely to move beyond Rs 27-28 for Maharashtra or maybe Rs 29-30 for UP. In this scenario, majority of 15-20 listed stocks have their presence only in the domestic market. The sector is likely to remain subdued at least for the next couple of months.

Q: You track Tata Coffee as well and coffee prices have also corrected overnight. What do you think is a fair value for that stock which has had a great run?

A: People try to encash or give strong valuations and we saw that coming in when the company announced merely an alliance with Starbucks. At that time also, the share price moved to about Rs 780-800 and a similar case is now being seen with the Arabian coffee reaching an all time high but we see a lot of volatility as well. In fact the volatility in the commodity price is taking advantage by the few investors who make a lot of volatility in the stock.

On a pure fundamental basis, I don't think that share deserves a value of Rs 550-600 per share because you have a comparative play available in the form of CCL Products. One can make the comparison where sometimes the market goes extra gung-ho just like the news of their alliance with Starbucks which was not an exclusive arrangement or not a marketing tie-up.

Similar is the case happening here and I won't be surprised to see share price maybe falling again to about Rs 600. Traders or maybe short-term investors may get badly trapped in this stock. I get lot of queries that we bought the share at Rs 750, now it is ruling at Rs 550. This is spoiling the name of Tata and looking to the volatility, this is not desirable in a company like Tata Coffee where 58% stake is held by Tata Global. So taking a fair value, I won't give valuations beyond Rs 550-600 to the share.

Q: You keep an eye on textiles, what did you make of 20% move in Gokaldas Exports yesterday?

A: That is largely to do with the control now taken over by Blackstone but I don't think the immediate improvement in the financial health of the company or a financial turnaround is likely to happen. This is more to do with the sentimental effect on the stock because Blackstone has been holding the ownership of the company.

Now they have taken over the management also but one has to see the turnaround on the fundamental basis and this has to do more with the sentimental value. I won't be advising buying. Maybe a rise of about Rs 8-10 from hereon is likely, Rs 125 but not beyond that and it would be risky to buy or enter in the stock now at these levels.

Q: Cement has become quite volatile, after this price increase in some regions like the North. How would you approach this sector?

A: The pricing power is coming back slightly to the companies. This is the season, which will last up to June end. The companies have started passing on the increase but the increase which we have seen initially of about Rs 8-10 is more to do with the budget excise burden, which has been stipulated so there won't be any margin expansion but yes, even if the off-take happens or even if the quantity gets lifted that can give the advantage to a company.

We have seen huge capacity additions in the sector and there has been probably apprehensions at capacity utilization which now stands at about 87-88% and could fall to as low as maybe 75-77-78%. Quantity, volume increase will be the advantage for the companies and not the pricing power at least in the initial one month or so.

Q: A quick word on the stock which listed yesterday Acropetal - where do you see it stabilizing?

A: I don't see that value beyond Rs 75 because I will be comparing this company with Omnitech, Allied Digital and Zylog. Generally, all these companies are ruling at a P/E multiple of 3.5-4 times. Sometimes you cannot rely on the interim results which have been declared by these companies for six months.

One has to see the FY11 results as they have been losing the tax benefit advantages because this company has been 100% nil tax payment company. Taking all this into consideration, maybe a broad range of Rs 60-75 but it doesn't deserve a valuation beyond Rs 75.