SP Tulsian's top picks: Gujarat Gas, Allcargo Global

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SP Tulsian's top picks: Gujarat Gas, Allcargo Global

SP Tulsian of sptulsian.com, in an exclusive interview to CNBC-TV18, gave his multi-bagger ideas for the day. He sees Gujarat Gas and All Cargo Logistics fetching 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 Guj Gas BSE | NSE 29/05/12 Are Mutual Funds betting on Guj Gas? Other Stocks in this news Allcargo Logistics | Reliance Infrastructure | Reliance Capital | Reliance MediaWorks | Reliance Communications | IVRCL | Lanco Infratech | NCC | KS Oils | Indiabulls Real Estate | Bajaj Hindusthan Sugar & Industries | Shree Renuka Sugars |

SP Tulsian of sptulsian.com, in an exclusive interview to CNBC-TV18, gave his multi-bagger ideas for the day. He sees Gujarat Gas and Allcargo Global fetching good returns ahead. He also spoke about other stocks across various sectors.

"Gujarat Gas is the largest natural gas distributor in the private sector. For the first half of the year they posted an EPS of Rs 13 plus. The company is expected to post an EPS of Rs 25 plus in CY11. It is debt free company. One can expect a return of 18-20% in a couple of years."

"Allcargo is global logistics solutions provider. The promoter's hold 70% (unpledged) stake in the company. Institutional investors hold 25% of which 14% is held by Blackstone, so the public float is very low. The company is expected to post an EPS of Rs 20 plus for calendar year 2011. The company has been a consistent performer and one can expect 25% return on this stock in the next one year."

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

On Gujarat Gas

The company is the largest natural gas distributor in the private sector. They have dominance specially in the State of Gujarat. They are present in every city of Gujarat with about 12 receiving stations. They have a pipeline network of 3,700 km. The company's financial year ends in December. They recently posted second quarter results for calendar year 2011 which have been quite good. For H1 (first half) the company has already posted an EPS of Rs 13 plus.

Going by the valuations, this stock looks very good for investment. This is because in calendar year 2011 the company is likely to post an EPS of close to Rs 25 plus. The share is ruling at a PE multiple of about 16 times.

Apart from that, it is debt free company, sitting on cash. The company has invested around Rs 500-550 crores in mutual funds. They won't have any problem in expansion of their gas network because Gujarat is seen as the hub and has good customer demand.

British Gas holds close to about 65% stake in the company, 25% is held by the institutional investors with public float of about 10%. The stock qualifies as a safe investment because this is the time to identify these kind of stocks where the downside risk is low. One can expect 18-20% return on this stock over the next couple of years.

On Allcargo Global

Their financial year ends in December and they have posted an EPS of Rs 5 plus in Q2. The company is an integrated logistic service providers having container freight stations, warehousing, air freight, multi model transports and presence in two- three countries overseas. Promoters hold 70% stake (unpledged) in the company, 25% is held by the institutional investors of which 14% is held by Blackstone, so the public float is very low.

The company is expected to post an EPS of Rs 20 plus for calendar year 2011. Considering the demand and growth of this sector, they should be able to post a growth of 25% in topline and bottomline going forward. The share is now ruling at a PE multiple of 8, price to book is also quite reasonable at 1.5. This is because the present book value is close to about Rs 100.

Taking Rs 20 as the EPS for calendar year 2011, the price to book can be seen at 1.3-1.4 one year going forward. The stock seems to be quite good for investment. One can expect a return of 25% over next one year if taken an investment view from here on.