Tulsian cherry picks Indo Tech Transformers, Greaves Cotton

2330 Investors following Indo Tech Trans. Share this News with them.

0

Like this story, share it with millions of investors on M3

Tulsian cherry picks Indo Tech Transformers, Greaves Cotton

SP Tulsian of sptulsian.com selected Indo Tech Transformers and Greaves Cotton as mutlibagger stocks for the day. He citied views and outlook for these stocks and see them earning better returns ahead.

Post your opinion here

 

0

Tweet

Share on Tumblr

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 Indo Tech Trans BSE | NSE 29/05/12 Are Mutual Funds betting on Indo Tech Trans? Other Stocks in this news Greaves Cotton | Raymond | Arvind |

SP Tulsian of sptulsian.com selected Indo Tech Transformers and Greaves Cotton as mutlibagger stocks for the day. He citied views and outlook for these stocks and see them earning better returns ahead.

"At Rs 125 Indo Tech Transformers looks an ideal investment. One should have a time horizon of six to 12 months where a price of about Rs 175 to Rs 200 can be expected for the stock," Tulsian said.

"Greaves Cotton is an ideal investment. One should not expect too much upside from hereon. One can look for a price of Rs105- Rs110 in a period of about 10-12 months. This is a consistent stock where downside seen is very limited," he added.

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

On Indo Tech Transformers

This company is owned by GE and they hold 75% stake. This company was acquired by them in June 2009. This acquisition was quite expensive made at about Rs 500 plus share. At that point of time the company used to post an EPS of about Rs 40-50. It is a transformer making company having four plants in South India (Tamil Nadu and Karnataka).

Post acquisition of GE, the company has not been able to perform. It had been posting dismal financial results. That was largely due to business structuring by the old management, huge modifications and amendments have been carried out. Inventories have all been written off and that is the reason for such a pathetic performance.

The company makes power and distribution transformers, it is learnt that the company is back on track with production schedule, it is likely to maintain and the company is expected to perform better.

GE Group with a market cap of close to about Rs 125-130 crore is debt free. When it was acquired by GE, at that point of time also it was debt free even now the same status continues with book value of Rs 120. The company has multinational status and is engaged in the business of transformer making which seems to have very good potential.

This is good stock to enter because problems of last couple of years have been overcomed by new management. Things should be able to move faster and a dramatic turnaround can come. We have seen these kinds of turnaround in the past in companies like Siemens and SKF Bearings. At Rs 125 the stock looks an ideal investment. One should have a time horizon of six to 12 months where a price of about Rs 175 to Rs 200 can be expected for the stock.

On Greaves Cotton

They have been maintaining financial performance. Quarter-on-quarter they have either maintained it or there has been sequential growth of about 1-2% in the top-line and bottom-line. Their second quarter results have been very good.

The company has a product profile of making diesel engines but apart from that they are making petrol engines, gensets, road construction and infrastructure equipment. The product profile of that segment is very low. The diesel engine constitutes about 75% to 80% of their product portfolio.

Considering consistency of the financial performance and Rs 850 crore turnover in the first half with an EPS of about Rs 3 for first half, this is a very good investment. The company has been very consistent in declaring quarterly dividend. They have declared two dividends of 20% each which means 40% two interim has already been given. Two more interim dividends of similar kind are likely to come in the remaining six months.

This is an ideal investment. One should not expect too much upside from hereon. One can look for a price of Rs 105 to Rs 110 in a period of about 10-12 months. This is a consistent stock where downside seen is very limited. I don't think it can fall below Rs 80 under any eventuality. Even if it falls to those levels it will quickly bounce back. Over a 10-12 months period I am expecting a price of about Rs 110.