Tulsian's multibaggers: Hikal and DIC India

1220 Investors following Hikal. Share this News with them.

0

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

Tulsian's multibaggers: Hikal and DIC India

SP Tulsian, sptulsian.com picks out his multibagger stocks ideas the day. He chooses Hikal and DIC India. Check out his comments.

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

SP Tulsian, sptulsian.com picks out his multibagger stocks ideas the day. He chooses Hikal and DIC India. Check out his comments.

On Hikal

This company is very strong in R&D and contract research manufacturing. If you see their business model, they have been making API (Advanced Pharmaceutical Ingredients) and specialty chemicals for the pharmaceutical and agrochemical industries. Apart from that, they have been acting as a link with the actual users of the API as well as being an innovator. They have a very strong business model and the company has been showing consistent improvement in financial performance also because there are lot many products which are in the pipeline which will get capitalized in the time to come.

For first nine months, the financial performance has shown a growth of 30% in topline as well as in bottomline, and because of that, the first nine months EPS of the company is close to at about Rs 24. It was at Rs 18 in the comparable period and about Rs 25 for whole of FY11.

As I said, because of the strong product pipeline and strong R&D and CRAMS business, the growth trend is likely to continue. If you see the shareholding pattern, promoters are having a stake of close to about 69-70%, HNIs hold quite a good quantity of the stock.  With the consistent improvement in performance, I think that the stock is looking quite good and a price of about Rs 350 can be expected in next one year or so.

On DIC India

DIC India are makers of printing ink and they have seven manufacturing plants, all located in the metros - Delhi, Calcutta, Chennai, Mumbai... Since the metros have good consumption and considering the demand for printing ink in packaging and so many other things, they have virtually been a leader.

This company has their year-ending in December and for 2011 which they have just finished, they have declared their results with topline of close to about Rs 700 crore and EPS has been very robust at about Rs 28-29. Being a multinational company, a couple of months ago, there was talk that probably this could be a delisting candidate. But I won't rely on that news or on that move so much because the promoters are holding 72%.

If you purely focus on the financial performance, it is close to about Rs 30 EPS and the company has its book value close to about Rs 290 for this year as on 31st December, 2011. That means the stock of a multinational company is available at 0.9 times book value, and as I said that the PE-EPS is close to about Rs 29 for calendar year 2011. So one can expect a EPS of close to about Rs 34-35 for calendar year 2012. That translates into a PE multiple of close to about 7.5-8 times.

Taking all these into account, this stock is looking very good. If someone can keep a view of about three years, sooner or later if the delisting news comes in, a price of Rs 500-600 can also be expected, but I have taken a price target of Rs 350 on next 12 months or so.