Aug 11, 2011, 11.02 AM | Source: CNBC-TV18
Aashish Tater sees Cochin Minerals fetching good returns in the longer term. He suggests investors to accumulate the stock for time horizon of three- four years.
He sees Cochin Minerals fetching good returns in the longer term. He suggests investors to accumulate the stock for time horizon of three- four years.
"This company is the only listed entity in this space. The fundamentals of this company can turn on a positive side overnight. For Q1, the company posted an EPS of Rs 2.5 and for the full years its EPS is likely to be at Rs 10. This stock is a buy on dip at around Rs 54-56 mark."
Below is the edited transcript of Tater's interview with Udayan Mukherjee and Mitali Mukherjee of CNBC-TV18. Also watch the accompanying video.
On Cochin Minerals
Cochin Minerals attracts me because itís the only listed entity in this space. It is available at price earnings multiple of less than six times going forward. The fundamentals of this company can shift overnight on positive front. Otherwise, we would see same kind of performance that it has been doing over years timeframe.
In 2010, there was a small difference between Japan and China. China is in a monopolistic situation. It controls 97% of the total synthetic rutile business across the globe. Since then there was lot of pricing power that even Indian counterparts have gone through. Cochin Minerals is clear-cut beneficiaries.
The company posted a Q1 EPS of close to Rs 2.5, for the full year it will post EPS close to Rs 10. The stock is hovering around Rs 60, it is giving a dividend yield of close to 3%. This is one stock which is a definite buy on dip candidate around Rs 54-56 mark.
On a broader front, the risk premium might get detached to our markets. But I donít foresee that coming for stocks which have good potential in terms of business. Cochin Mineral is an exact proxy of the business. This is one stock that people should accumulate right from Rs 54.50 mark from a very longer term perspective.
Japan has entered into a memorandum of understanding with India. Some quality companies likes of subsidiaries of Toyota Tsusho, Mitsui and Sumitomo Corp are going to extract titanium from India. This means Cochin Minerals' business is definitely going to boom from current levels.
It is into hazardous industry and this is the only problem. But, with pricing power coming to them the stock can get rerated in terms of PE. Its earnings potential may also improve going forward. This is one candidate that should be bought from three-four year perspective. We have a very aggressive target on the stock.
Disclosure: The stocks mentioned above have been recommended to our clients and firm might also have positions. There are no personal holding in the said stocks.
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