Multibagger ideas: Tulsian picks Emami, Goa Carbon

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Multibagger ideas: Tulsian picks Emami, Goa Carbon

SP Tulsian, sptulsian.com in an interview to CNBC-TV18 picked Emami and Goa Carbon as multibagger stocks ideas for the day. He sees these stocks fetching better 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

SP Tulsian, sptulsian.com in an interview to CNBC-TV18 picked Emami and Goa Carbon as multibagger stocks ideas for the day. He sees these stocks fetching better returns ahead.

The stock price of Emami fell on Monday because of the fire incident at the AMRI hospital and the directors of company have been arrested. but Tulsian feels that won't reflect on the working of this company in any way. The company is a well known FMCG player and has a large portfolio 270 products. "If one can keep a view of about one year, I am quite confident that the share can move to close to about Rs 500," he said.

Tulsian finds Goa Carbon an ideal buy and expects the stock to give 25-30% returns in 12 months time frame. He said, "It has three plants in India and a respectable plant capacity. It is debt free company."

Below is the edited transcript of Tulsian's interview with CNBC-TV18. Also watch the accompanying video.

On Emami

Emami is a fastest growing FMCG company which is engaged in health, personal care and beauty care products. They have total product portfolio of 270 products. This is the only company which has top brand ambassadors, bollywood stars like Amitabh Bachchan, Shah Rukh Khan and cricketers like Dhoni etc. So, this is has been their marketing strategy.

The stock has corrected because of the unfortunate incidence at AMRI Hospital and the directors of company have been arrested. I don't think that will reflect on the working of this company in any way. Sometimes when there is this kind of knee-jerk reactions coming in into the stock price, that makes a good entry point.

If one takes a call based on their FY13 earnings, then the share is available at a PE Multiple of close to about 20. The only caveat is that one has to be little careful that the stock corrected yesterday and is ruling at about Rs 355-356, one can set a price target of about Rs 340 which is not unlikely to get in this market. because that is very much possible.

For FY11 they had topline of Rs 1,100 crore with an EPS of Rs 15 plus. The best part of the company is that they have presence in 65 countries. Overseas they are present in the Middle East, Africa and SAARC countries where the growth for all their products is high. That makes this company quite good at these current levels considering their distribution network, 3,500 dealers and professional management for all their products is in place. All this makes it as a very good buy. If one can keep a view of about one year, I am quite confident that the share can move to close to about Rs 500.

On Goa Carbon

This is an interesting story. The company makes calcined petroleum coke which is largely used by aluminium industry and electrodes manufacturers. Green petroleum coke is used as the raw material for calcined petroleum coke, Green petroleum coke is imported and driven by the price of crude. The discovery of the selling price of the product is in import parity price. Infact crude prices have stabilised in these last three-four months but they are not affected by the foreign exchange volatility also.

For first half of FY12 the company has already posted a growth of about 30% in topline and growth of about 35% in bottomline. EPS which stood at about Rs 10 for FY11 is likely to be about Rs 14.5 to 15 for FY12 with topline of close to Rs 380-400 crore, which was Rs 270 crore for FY11.

They have three plants one at Goa, one at Bilaspur and one at Paradip. The total aggregate capacity of the all plants are four lakh tonne which is a respectable capacity. The total debts in the book of the company is close to about Rs 200 crore which are largely for financing the working capital because the net current assets of the company are quite high at about Rs 240-250 crore. If we net-off the working capital, then one can say that the company is also debt free.

If we take the total market cap of about Rs 60-65 crore and valuations of three plants, that makes it a very ideal buy because share is available at a PE multiple of anywhere between 4.5 to 5 times. One has to keep a view of about 12 months and look for return of 25-30%. Even if someone can keep a longer horizon, one can expect a return of 20% on an annualised basis over the next 3-4 years.

Disclosure: I have no personal holdings in the stocks discussed.