Aug 10, 2011, 01.21 PM IST | Source: CNBC-TV18

SP Tulsian's multibaggers: Thermax, LG Balakrishnan

SP Tulsian of cherry-picks his favorite stocks of the day on CNBC-TV18. Tulsian says that these stocks are poised for a good growth in the near- to medium-term.

SP Tulsian of cherry-picks his favorite stocks of the day on CNBC-TV18. Tulsian says that these stocks are poised for a good growth in the near- to medium-term.

He has a positive view on Thermax . His price target for the stock is Rs 600 in the time span of four-six months."Thermax caters to core sectors of the industry. It has been a consistent performer on a quarter-on-quarter (Q-o-Q) basis. In a market correction like the one we saw, people should accumulate stocks like Thermax."

His second pick for the day is LG Balakrishnan . The stock is expected to touch a price of Rs 400 in the next 10-12 months. "The company has 17 plants. It is low debt company and has a market capital of Rs 210 crore.Talking all this into consideration, it is a very consistent performer," he said.

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


The kind of performance we have seen from ABB , Crompton Greaves nobody is happy to touch the capital goods and Thermax also falls in this category. But, I have different view for this stock. The company is an engineering solution provider for heat recovery, waste recovery, water treatment, etc. It caters to the core sector industries like cement, steel, fertilizer, dairy. The company has been a consistent performer.

I have been tracking this company for the last 10 years. There have been no slippages on quarter on quarter basis except for last year or a year back. One of their overseas subsidiary did not perform well and they had to take an exceptional hit. In FY11, its turnover went up close to one billion dollar. They posted an EPS of close to Rs 30 plus. Going by their Q1 performance, they have been able to maintain the topline of Rs 1,000 crore.

The profitability is always back ended, it comes in the second half of the year. The promoters hold 62% stake and 28-29% is held by institutional investors. It is debt free company and has a very low float. On can can lap these stocks in a market correction like this one.

The stock moved to about Rs 700 couple of month back. At that time people come out with buying ideas on the stock. But whenever there is a correction of this kind people first try to jump out of these stocks. This is the time where one should really accumulate the stock.

I have a positive view on this stock, largely on account of consistency in performance going ahead. They have an order pipeline of 18 months close to about Rs 7,000 crore order. Taking all this account and the reduction expected in commodity prices will be quite well for the stock. I expect this stock to touch Rs 600 price in the next four-six months time.

LG Balakrishnan

The company makes metal forming and transmission parts for the auto sector. They have 17 plants. In Q1, they have posted topline of Rs 215 crore and EPS of close to about Rs 16. If one extrapolates the same, they have posted an EPS Rs 64-65 for FY12 that translates into a PE multiple of 4.2-4.3.

The price to book is less than 1. The total enterprise value of the company is about Rs 310-315 crore. This is because they have very low debt of just Rs 80-90 crore. The market cap of the company is close to about Rs 210.

Talking all this into consideration, it is a very consistent performer. The respectable holding of the promoters stands at 47-48% and 7% is held by the IFC Washington. The share just corrected by 8-10% and one can expect a price of Rs 400 in next 10-12 months.

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