Tater's multibaggers: Bombay Burmah, Bharat Bijlee

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Tater's multibaggers: Bombay Burmah, Bharat Bijlee

In an interview with CNBC-TV18, Aashish Tater, head of research at Fort Share Broking gives his views on select multibaggers like Bombay Burmah and Bharat Bijlee.

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In an interview with CNBC-TV18, Aashish Tater, head of research at Fort Share Broking gives his views on select multibaggers like Bombay Burmah and Bharat Bijlee .

"We have been recommending that one should be buying Bombay Burmah around Rs 380 to Rs 420 level and should be looking to exit between Rs 480 to Rs 500. If someone is looking for safer bets with strong balance sheet, Bombay Burmah definitely warrants a small investment. One can also add on dips," Tater said.

"If someone spreads this investment and takes a two year call from here on Bharat Bijlee, then he will be able to sell the stock between Rs 900 to Rs 1,000. Also, he is protected on long side because of balance sheet of the company," he added.

Below is an edited transcript of Tater's interview with CNBC-TV18. Also watch the accompanying video.

On Bombay Burmah

We have been recommending that one should be buying Bombay Burmah around Rs 380 to Rs 420 level and should be looking to exit between Rs 480 to Rs 500. In last six months it has happened already twice or thrice. Taking a call on its balance sheet, it owns 51% in Britannia through its subsidiaries and 14% in Bombay Dyeing so this is a very significant value to where it is trading right now. These stocks are owned as a relative holding so, it will never come to the markets.

Even from other perspective, the company has been able to rework and has sold its spring and sunmica division in the last three months. They have been able to realize close to Rs 280 crore from these two deals. The current market cap is around Rs 550 crore.

From fundamental perspective, the company is now left along with Britannia stake into tea and coffee estates also real estate division in Coimbatore and Mumbai. From that perspective because of market sentiments, the stock would be broadly trading in this particular range. Every time support would come between Rs 350 to Rs 400. So, if one wants to buy 200 shares, then one should go and invest 80 shares at least at current market price and wait for 8% to 10% dip to add on 40 shares.

This is because on upside the stock goes and tests that Rs 500 even in six months and at least once one can make 20-25% return. The company would give Rs 6 to Rs 8 of dividend that it has been paying for last so many years. From that perspective, if someone is looking for safer bets with strong balance sheet, Bombay Burmah definitely warrants a small investment. One can also add on dips.

On Bharat Bijlee 

Bharat Bijlee was covered by us on October 19, we had suggested that after Q2 results people would be disappointed. This is because Q1 did not reflect actual numbers since a large part was extra ordinary income. We left that the stock could correct to Rs 620 levels but it corrected to almost Rs 590. With Rs 340 crore market cap this is one stock we definitely warrant attention from longer term investor from spread to spread basis.

From balance sheet perspective, it holds blue chip companies - HDFC, Siemens and mutual funds to a tune of close to Rs 200 to Rs 240 crore given the current market scenario. If we knock out almost 50% of this, still we have Rs 100 crore to Rs 120 crore in terms of good blue chip companies.

These can be very easily sold on very bad days. So, Rs 120 crore for that plus Rs 30 crore in terms of cash that the company is having so almost Rs 150 crore of Rs 340 crore. The company would be doing on conservative side close to Rs 30-Rs 35 of EPS from their core business.

We are projecting a dividend of Rs 32 for this fiscal because of extra ordinary income. But we have cut down on our projection and we fell that the company would still be paying a dividend of Rs 25. This is stock which is available at Rs 600 with almost no downside because of its strong balance sheet and consistent earnings. Though the business that they are operating in has some problem industry wise, still they will be able to clock EPS of Rs 35 to Rs 40 on conservative side on business front.

From every angle the stock is available adjusting all this at a PE multiple of less than Rs 5. This definitely warrants an investment bet on spread basis. During the correction of 2008-2009 weighted average price for the stock on conservative side was roughly around Rs 450, since then they have added almost Rs 100 on to the balance sheet.

That roughly makes Rs 530 to Rs 550 on conservative side as weighted average. If someone spreads this investment and takes a two year call from here, then he will be able to sell the stock between Rs 900 to Rs 1,000. Also, he is protected on long side because of balance sheet of the company.