SP Tulsian's cherry picks: Marg, DCB

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SP Tulsian's cherry picks: Marg, DCB

SP Tulsian of sptulsian.com in an interview to CNBC-TV18 spoke about his top picks for the day. He sees Marg and DCB having the potential to fetch good returns ahead.

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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

SP Tulsian of sptulsian.com in an interview to CNBC-TV18 spoke about his top picks for the day. He sees Marg and DCB having the potential to fetch good returns ahead.

"Marg has posted good performance on standalone basis.Once we see renewed buying interest coming in stock Marg has the potential to move to about Rs 115 next one year but with a very limited downside."

"DCB has improved its working in FY11 and hence posted profit in FY11. Wherever there is news about stake sale by promoters the stock witnesses a sharp upmove. The stock is likely to be in Rs 45-65 range in six-12 months time frame."

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

On Marg

The company has a very interesting portfolio; they are into EPC, construction, realty and engineering projects. They have already commissioned first phase of Karaikal Port with capacity of 5.25 million tonne of cargo. They have ship repair yard and two integrated SEZ in townships.

Considering relatively larger companies than this, their financials have derailed. They have not been able to stick to the financials. Their balance sheet is over leveraged. There has been delay in their projects but these weaknesses are not seeing with respect to this company.

On a standalone basis the performance has been quite good. On a consolidated basis, they posted a top line of Rs 1,000 crore, dividend payment of 20% and EPS of close to Rs4-5. Their current market cap is around Rs 300-310 crore. All these things give confidence that the share at Rs 80 looks to have corrected a lot.

Once we see renewed buying interest coming in stock Marg has the potential to move to about Rs 115 in next one year but with a very limited downside.

On DCB

Since the release of RBI guidelines, NBFCs say that they have aspirations to enter banking. If one makes a list there are around 20-25 aspirants. But I don't think Reserve Bank will issue more than 5 licenses. Considering this, consolidation is likely to happen in the existing space.

There may be some acquisitions and DCB seems to be a very good bank. They have about 80 branches, all branches are tech savvy with presence in 10 states. In FY11 there has been dramatic improvement in their working.

In FY10 DCB posted a net loss of Rs 78 crore but in FY11 there net profit was Rs 22 crore and the trend of profitability is continuing. The NIM is maintained at 3% plus. Net NPA has been brought down to 1.2% from 5% earlier. Capital adequacy ratio is quite healthy at 13%.

There is news of stake sale by the promoters of DCB. HDFC Bank is looking at this as a potential takeover target because they are holding 2% plus stake in this bank. Whenever there is stake sale news we see a sharp up move in this stock. It moves close to about Rs 60-65.

From a six-12 months horizon, the stock could be in Rs 45-65 range. The share is virtually ruling at the lower end of the range. I don't think that there is any downside. If one has 12 months view the share has potential to move to about Rs 65.

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