Tulsian's cherry picks: Swaraj Engines, Piramal Glass

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Tulsian's cherry picks: Swaraj Engines, Piramal Glass

SP Tulsian of sptulsian.com, in an exclusive interview to CNBC-TV18, gave his multi-bagger ideas for the day. He spoke about stocks like Swaraj Engines and Piramal Glass.

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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 Swaraj Engines BSE | NSE 29/05/12 Are Mutual Funds betting on Swaraj Engines? Other Stocks in this news Mahindra and Mahindra | Piramal Glass | Shree Renuka Sugars | Sakthi Sugars | EID Parry (India) | Coal India |

SP Tulsian of sptulsian.com, in an exclusive interview to CNBC-TV18, gave his multi-bagger ideas for the day. He spoke about stocks like  Swaraj Engines  and Piramal Glass .

He said, "Swaraj Engines manufactures diesel engines for Mahindra and Mahindra (M&M) tractor. The promoters' stake in the company is stands at 51%, HNIs and funds hold 28% stake. It is debt free company. The stock holds good potential to touch Rs 550 in the next 10-12 months."

"Piramal Glass is a Piramal Group company. It has presence in India, Sri Lanka and the United States. The company is expected to post an EPS of Rs 17-18 in FY12.  If the company is able to post Rs 17-18 EPS, the share can move to about Rs 170-175 in the next six- eight months," he added.

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

On Swaraj Engines

M&M acquired 33% stake in the company in March 2009. Since then, company has been continuously improving. The company registered best performance in FY11. It posted an EPS of close to Rs 35. The company has been operating at 110% capacity. In Q1, the company posted topline of Rs 110 crore with EPS of close to about Rs 11. Their equity base is quite low at Rs 12.50 crore. The company is sitting on cash and cash equivalent of about Rs 150 crore, which translates into value per share of Rs 120.

If we extrapolate the Q1 performance, the company always has been posting similar performance every quarter. They supply engines to the tractors manufactured by M&M. They should be able to post an EPS close to about Rs 42-43. If I knock off the share price (Rs 450) and Rs 100 as cash sitting in the books of the company, the share is ruling at a price of Rs 350. This translates into PE multiple of less than 10 or maybe in single digit. This stock holds good potential and one can expect a price of about Rs 515 in next 10-12 months time.

On Piramal Glass

The company manufactures glass containers for pharmaceutical and perfumer industry. I don't think the company has been focusing too much on increasing their topline. But, improvement in net profit margin has been seen. In FY11, the net profit margin was slightly lower than 8% but in Q1 it is close to about 10%.

They have two overseas plants in Sri Lanka and US which have started performing quite well. Both have contributed to the bottomline of the company. For Q1, the company has posted a topline of Rs 325 crore with EPS of close to Rs 4 and PAT at about Rs 32 crore. The company should be able to post an EPS of Rs 17-18 for FY12.

Piramal Group is the promoter of this company, with promoter stake of close to 77%. HNIs and institutions hold close to 13-14% stake in the company. The share has good potential to move upwards. If the company is able to post Rs 17-18 EPS, the share can move to about Rs 170-175 in the next six- eight months.

Disclosure: I have no personal holding in the stocks discussed.