Multibaggers: Stocks where SP Tulsian sees upside potential

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Multibaggers: Stocks where SP Tulsian sees upside potential

SP Tulsian, sptulsian.com is bullish on Punjab and Sindh Bank, Compucom Software, and Century Enka.

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Excerpts from Bazaar on CNBC-TV18 Watch the full show » RELATED NEWS Multibaggers: 3 stocks where Aashish Tater sees value Multibaggers: Boost your returns with Ashish Chugh's gems 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 is bullish on Punjab and Sindh Bank , Compucom Software , and Century Enka .

Below is a verbatim transcript of his interview with CNBC-TV18's Mitali Mukherjee and Udayan Mukherjee. Also watch the accompanying video.

Q: Why do you like Punjab and Sindh Bank?

A: Yes, I like this bank. I have taken a pure fundamental call because last month when this bank went public, there was huge and tremendous response. This bank is having more than 50% branches in Punjab with branch network of close to 950. If I take price to book, it is ruling at slightly below 1, maybe at 0.95-0.96. Purely going by the fundamentals, if I compare this bank with the comparable peers like Dena Bank or Bank of Maharashtra or maybe United Bank of India, which are more the state centric play, all these banks have a earnings per share (EPS) of close to about Rs 12-15, whether you talk of Bank of Maharashtra, United Bank of India, Dena Bank, but this bank is likely to have an EPS of Rs 25 for FY11. In fact this bank does not have much exposure or very miniscule exposure to the reality sector and maybe the micro finance sector which also has been the concern off late.

If I go by the growth prospects or even by the asset quality, they have the net non performing asset (NPA) of less than 0.5% and gross NPA of less than 1%. So, I am quite hopeful that maybe for FY12 the bank should be able to post an EPS of maybe more than Rs 25, though the same EPS is likely for FY11, but the same trend is likely to continue even if we see 10-12% growth, they should be able to have a Rs 28 EPS.

Going by these parameters, price to book of less than one on the historic earning and PE of less than 5, I don't think that you have much downside and maybe it has come now close to the issue price. So, you see the downside from that respect also very limited. That is the reason I have chosen or I have taken a slightly contrarian call than the prevailing trend.

Q: You have picked a smallcap IT company called Compucom Software, why you like it?

A: This is a Rajasthan based company and they have the presence in the IT education. They have about 50 schools in their fold. The promoters have gone ahead with the issue of warrants also by which they will be mobilising close to about 40-45 crore. The face value of the share is about Rs 2 and it is ruling at close to about Rs 17. Couple of months back, the company has issued bonus share in the ratio of one share for every two shares hold. So, you see the share ruling at quite low price at Rs 17, since the share has recently gone ex-bonus and the face value of 2.

If I go by the financials, they are likely to have an EPS of about Rs 2 for FY11 on a top-line of more than Rs 50 crore. But going forward, the management has aggressive plans. They are diversifying for which they have issued the warrants, they will be mobilising about Rs 35-40 crore which will be utilised by them to fund those expansions. So, I am quite positive, this should be taken more as IT education company.

Considering that, I think that there is very limited downside, but once you have these announcements or the renewed steps taken by the company, the share can move by about 40-50% in about four-six months time.