PN Vijay's multibaggers: Dishman Pharma and OnMobile

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PN Vijay's multibaggers: Dishman Pharma and OnMobile

PN Vijay, portfolio manager at pnvijay.com joins CNBC-TV18 to pick out stocks that are multibaggers if picked now. He chooses Dishman Pharma and OnMobile.

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PN Vijay, portfolio manager at pnvijay.com joins CNBC-TV18 to pick out stocks that are multibaggers if picked now. 

He chooses Dishman Pharma and OnMobile.

On Dishman Pharma

Dishman Pharma is a mid-sized pharmaceutical company based in Andhra. It came out with pretty impressive results in Q2 in the midst of generally poor results from many corporate. The topline has grown by 27% driven by a 93% growth in its marketing molecules business, the MM business as they call it, and a slightly sluggish growth in the CRAMS business of about 5% year on year, but 6% quarter on quarter. The EBITDA growth momentum was very strong; it is more than 27%. At the bottom-line, that is at the net profit level, Dishman has reported a loss of Rs 6 crore driven mainly by non-cash forex provision and slightly higher interest cost of Rs 18 crore. Like many other companies, Dishman has also been hit by this strong dollar against the rupee.

Going forward, we expect this momentum to continue because for many large multinationals, Dishman is the preferred supplier of marketing molecules and the sales strategy is depended on Dishman supplying. For example, for Abbot, Dishman is their sole supplier for many of their top products.

In terms of valuations the share is very attractive at about Rs 45 or so, it is trading at about 4.5-5 times current earnings which is low from historical standards. A trigger could be sale of its Chinese unit where the unit has been bogged down by various approvals by the Chinese authorities and that should improve cash flow, bring some cash back in to Dishman's balance sheet and reduce its debt.

So to our mind, this stock represents 40% growth potential and I would like to put a target of about Rs 65 for Dishman over the next 12 months.

On OnMobile

Onmobile has of course had a terrible time in the stock market in the last two years, and it is now trading at a pretty low Rs 60.

The company grew by about 20% this quarter and the quarter on quarter run rate was much better than the year on year, which indicates earnings momentum.

The concerns on Onmobile which investor have is on their domestic business where there seems to be sluggishness, not that the domestic demand is low. For example, applications for smart phones and regular phones are a huge growth opportunity and there are very few big players in this line. Except that some policy issues and some TRAI issues keep coming up, but I feel this is of a temporary nature.

So at Rs 60, it is trading about 6.5 times 2012 earnings, which to me is very attractive, and I am putting a target of about Rs 90 for Onmobile in the next 12 months. I should say this stock is for a high-risk investors because it shows a tremendous volatility in the stock market.