Multibaggers with SP Tulsian: Mayur Uniquoters & GSPL

2019 Investors following GSPL India. Share this News with them.

0

Like this story, share it with millions of investors on M3

Multibaggers with SP Tulsian: Mayur Uniquoters & GSPL

From his goody bag, SP Tulsian pulls out Mayur Uniquoters and GSPL and his top picks of the day.

Post your opinion here

 

0

Tweet

Share on Tumblr

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 BSE | NSE 01/01/70 Are Mutual Funds betting on ? Other Stocks in this news Mayur Uniquoters | Coal India | Thermax | Hindustan Copper | MMTC Ltd |

SP Tulsian of sptulsian.com today pulls out a company that has otherwise been under the radar, Mayur Uniquoters. This company makes synthetic leather for many high profile clients, and has a strong financial performance. So, Tulsian advises investors to look to buy into the stock.

His second pick for the day is GSPL which has also been rallying after its recent correction. Tulsian tells CNBC-TV18 that this stock has the capability to give 16-18% returns every year for the next three-four years, so it is a good buy.

Mayur Uniquoters

This company makes synthetic leather which is used in the auto seats, footwear and ladies purses. If you see, the company has capacity of about 21 lakh meter per month and they have very reputed customers like Maruti, Honda, Hero, Bajaj Auto, Tata and PIAGGIO. Similar is the case in the footwear space where they are supplying to Bata and Liberty. They are one of the most reputed and preferred supplier of the synthetic leather to all three sectors.

If you see the financial performance of the company, if I take the total turnover of this company for nine months it is at Rs 225 crore with PAT of Rs 22.5 crore. That translates into an EPS of close to about Rs 41 per share for nine months. If you see Q3 results, which it announced yesterday, it has posted an EPS of close to about Rs 40. So one can conveniently expect that the company is likely to post an EPS of Rs 60 for FY12.

The best part about the company is that they are gradually ramping up their capacity. The capacity was at about 14-15 lakh meter per month maybe about six to eight months back which is now placed at about 20-21 lakh meter per month and more importantly, the company is operating at maybe at 90% plus. If you see the financial position, equity is of Rs 5.5 crore, free reserves of Rs 80 crore and of that Rs 40 crore is lying as cash balance with the company. That is the reason for the company's liberal distribution of dividend. For FY12 they have already declared three dividends; first interim was 15%, second interim was 20% and yesterday they have declared third interim of 50%. So total 85% in the form of three interim dividends have already been paid against 100% of FY11. So one can conveniently expect that the final dividend is likely to be about 40% making the total dividend of about 125%.

This stock I recommended in the month of May 2011 when it was ruling at around Rs 298-300 and post that in two months it moved to Rs 460-470. Then thereafter because of the weakness we have seen in all the midcap or small cap stocks this stock also corrected. But after seeing the Q3 results yesterday, I find the stock to be quite good and attractive at the current level of Rs 380-385. I expect that this stock has the potential to move to about Rs 500 in six months. If one can hold it for a period of maybe 12-18 months, I won't be surprised to see price moving to Rs 650-750.

GSPL

I think this stock falls in the category of other stocks which have seen a run-up of about 30%. The stock corrected and made a low of about Rs 73-74 last month and now it has started gradually going up and is ruling at about Rs 86. If you see the fundamental business of the company, they are gas carriers having strong presence in Gujarat. Of the total gas pipeline in the country of about 10,000 kilometers, the company has close to about 2,160 kilometer of the gas pipeline in their fold. Apart from that, the company is putting on three routes for about 4,000 kilometers of gas pipeline.

The financial performance of the company has been quite stagnant. For the first six months they posted an EPS of about Rs 4.75 against Rs 9 of FY11. The company will be declaring their results on 9th February, and again they are likely to the same. My only caution is that when we see the Q3 results, we should not get mistaken on a year on year basis because in FY11 the company changed their depreciation method from 8% straight-line they reduced it to about 3% on the gas pipeline network. Due to that, quarter-on-quarter may not give the correct picture. But if you make a YoY comparison for the full year taking that into account the knocking off the depreciation differential, the results are likely to be the same.

One can expect an EPS of Rs 9-9.5; cash EPS is very high at about Rs 13.54 and that is in fact helping the company to plough back the amount which they are earning every year in the form of investing into the new projects, either in the joint venture or on of their own. If you see the debt-equity ratio also is not very high. It is at about maybe 0.5-0.6% as of now and even if they have to make some borrowings for their new project it will not exceed more than 1%. So share is ruling at a PE multiple of 8 and it has a good value, so one can have this as a portfolio stock with a view of about two to three years which is capable to give a return of about 16-18% every year over next three to four years.

Disclosure: I have no personal holding in any of the stocks discussed.

SP Tulsian doesn't expect the rally to continue into February.. Read on to find out why..