PN Vijay's 2 multi-bagger ideas for long-term investors

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PN Vijay's 2 multi-bagger ideas for long-term investors

In an interview with CNBC-TV18, portfolio manager PN Vijay, spoke about his multi-bagger ideas LIC Housing and Cadila Healthcare.

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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 LIC Housing Fin BSE | NSE 01/06/12 Are Mutual Funds betting on LIC Housing Fin? Other Stocks in this news Cadila Healthcare |

In an interview with CNBC-TV18, portfolio manager PN Vijay, spoke about his multi-bagger ideas LIC Housing and Cadila Healthcare.

Below is a verbatim transcript of the interview. Also watch the video.

On LIC Housing

It was one of the biggest success stories of 2006-2007. Then like everybody else they corrected and then it again started a big move. Come last October-November, the Money Matter scam hit the market and of course the LIC senior executives were arrested and so on, and that sent a huge sell off - I think the share was still pre-split at that time. The share lost about 20-25%.

Even at that time people like us felt LIC Housing is after all a subsidiary of LIC, which is India's biggest financial institution and insurer, so these may affect in the short-term but with the government support etc, it should pull through. It is exactly what has happened. In the last quarter of course the net interest margins (NIMs) have gone up quite considerably and it is 3.45%, which in the context of the pressure on NIMs of other financial institutions is commendable.

LIC Housing is trading at a pretty big discount to HDFC, which I think is not justified. Of course HDFC is HDFC, but even then I think it would do a lot more catching up and it is a great share to pick up given all its credentials and its focus on the home loan market.

On Cadila Healthcare

It is a great share. We are running slightly risky times and shares like Cadila have a great appeal to people. It has got a strong domestic formulation business, about 31-32%. The Hospria joint venture, where it supplies to the US market, has really taken off that was a big thing last quarter and it is contributing handsomely not only to the topline but to the bottomline also. It just became one billion dollar company last month.

Cadila is on a very good wicket. It is in domestic formulations and global export story. The way it is trading at a big discount to Lupin or Cipla or Dr Reddy's, I think lot of catching up because in the market Cadila is perceived as something which is of high quality.

It is going to report about 48-50 earnings in the current season, so it is around 20 times current earnings which is a good price to pay for a stock like that.