Multibagger of the day: Tulsian picks Morganite Crucible

Below is the edited transcript of Tulsian's interview with Udayan Mukherjee and Mitali Mukherjee of CNBC-TV18.

On Morganite Crucible

A: This is a multinational company with Morgan of UK is holding 75% stake. They are making silicon carbides and clay graphite crucibles. Crucibles are consumables used as pots for melting metals. They are largely used in non-ferrous industries. This has continuous demand in all the plants. I won’t be calling their business model as a monopoly, but they have very good preference and good market share.

The only problem is that it is very small company. They have a market cap of close to about Rs 100 crore. For FY11 they posted an EPS of about Rs 20 plus, while the first half EPS has been at Rs 17.50. This means they have been gaining their pricing power. I am expecting them to post an EPS of about Rs 35 for the current year.

Considering new capacity getting created in the non-ferrous metal industry, product demand is likely to continue. Stagnation in the top-line is seen for FY12 in spite of that the company has been able to post a bottom-line growth of close to about 60%. The top-line growth likely in FY13 is at about 12% and the bottom-line growth may come close to 20% plus on the FY12 performance. I am not playing it as a delisting theme, but going forward it has the capability to give Rs 450 in next 12 months time from hereon.