Tulsian's top picks: AIA Engg, Jindal Poly, Sanghvi Movers

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Tulsian's top picks: AIA Engg, Jindal Poly, Sanghvi Movers

SP Tulsian, sptulsian.com, in an interview with CNBC-TV18’s Mitali Mukherjee and Udayan Mukherjee, citied his multi-bagger ideas for investments.

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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 AIA Engineering BSE | NSE 29/05/12 Are Mutual Funds betting on AIA Engineering? Other Stocks in this news Jindal Poly Films | Uflex | Sanghvi Movers | Nova Iron & Steel Ltd | Bhushan Steel |

SP Tulsian, sptulsian.com, in an interview with CNBC-TV18, citied his multi-bagger ideas for investments. AIA Engineering , Jindal Poly and Sanghvi Movers are his top picks for the day.

Tulsian sees a good scope in AIA Engineering. Those who have a short-term view of about three months can expect a price of Rs 450. But, in a year's time share is expected to move to about Rs 550.

"One can expect a price of Rs 400 maybe next three - four  months time for Jindal Poly . If one can keep a view of about 1 year he should be able to see a price of Rs 500," he added. He expects Sanghvi Movers to see a price of Rs 200 in the time horizon of 1 year.

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

On AIA Engineering

This company makes hydrometallurgy internal product which are used as a grinding solutions by the cement, mining and thermal based power plants. This is a very critical component used for grinding the raw material whether it is coal or limestone. So they play a very important role.

This company has been consistently posting better financial performance and in fact there is no comparative peers available in the market. Because there are one or two closely held companies which are not listed on the stock exchange. So they virtually have a monopoly.

If you go by the shareholding pattern 62% of the company stake is held by the promoter and 33% is held by the mutual funds and the FIIs. This 33% has been gradually or marginally been ramped up every quarter which was maybe at about 30-31% a year back has been now increased to 33% leaving very low flow in the market.

The company has posted a topline close to about Rs 1200 crore with PAT of Rs 180 crore which translates into an EPS of about Rs 19.50 for FY11. The company is a debt free company.

They do not have any debts in their books. I am expecting that for FY12 the company should be able to post an EPS of close to 24. If you take that kind of financial performance share is ruling at a PE Multiple of 16 and as I said that this is a very innovative and monopoly kind of situations.

These products traditionally have been enjoying a PE multiple of 22-24. So, I see a good scope in the stock if held with a one year view. But, those who have even a short-term view of maybe about three months can expect a price of Rs 450. But, in a year's time I am expecting share to move to about Rs 550.

Also Read: Mid-cap bank stocks might outperform in near-term says Mape Sec

On Jindal Poly

Jindal Poly is the largest PET and BOPP filmmaker in the country. They have the largest metalizing capacity also. In the last two quarters all the filmmakers whether you talk of the BOPPs that is the main product which is used in the packaging have not been posting that kind of performance.

They had their best quarter for fourth quarter in September. But, in December and March we have seen their profitability going down. Though they have posted excellent profitability during all these four quarters whether you talk about any comparable peers like Uflex or other 3-4. But, Jindal Poly being the largest player, they have the largest capacity in the industry.

That from here on product prices have stabilized now. We should not have any complain that here on the prices will keep on falling. The book value of the share historic as on March 31 2011 is about Rs 350. So share is ruling at a price-to-book of less than Rs 1.

They have posted an EPS close to about Rs 127 for FY11. In the first quarter of FY11 they had very low profit. Quarter two had been quite good for FY11 and quarter three and quarter four should get extrapolated for FY12 as well.

If you take a reasonable estimates on the financial performance of the company for FY12 I am expecting them to post a topline of Rs 3,000 crore plus. EPS is expected to be anywhere between Rs 110-120. As I said of FY12 it had an EPS of Rs 125.

So, going forward if you take a call,  based on this expected performance share is ruling at a PE multiple of less than 3 and maybe at a cash PE multiple of closer to about 2.2 to 2.4. In my view it has a very limited downside.

Since they have seen that they don't need much of the cash from here on and they have a cash flow of Rs 500 crore every year. So the company has taken 73% stake in a 1,800 megawatt power project which is coming up in Orissa.

That could be seen as the diversification by the Group. So overall, the downside is very limited. One can expect a price of Rs 400 maybe next three - four  months time for the share. If one can keep a view of about 1 year he should be able to see a price of Rs 500.

On Sanghvi Movers

Sanghvi Movers is a very interesting play. They are the largest crane hiring company in the country. Third largest in Asia and 9th largest in the world. They have fleet of 356 high duty hydraulic crawler cranes.

They had a topline of Rs 360 crore. That means each crane has given them an average revenue of Rs 1 crore per year. Their PAT margin that is at about 24% while cash profit margin is closed to about 53%. They have posted an EPS of close to about Rs 20 with cash EPS of Rs 44.

So if you take that into consideration since I said that the company has huge cash flow flowing every year to them they have recently completed an expansion of Rs 300 crore. I am expecting that that will start yielding good results or good performance to the company from this financial year 2012 onwards.

So the share is ruling at a PE multiple of maybe about 4 based on FY12 performance and at a cash PE multiple. As I said the cash profit is almost 120% of the profit-after-tax. So the share is ruling at a cash PE of close to about 2.2 or 2.25.

So, I don't think that there are chances of any downfall. But, if one can keep a view of about 1 year on this stock he should be able to see a price of Rs 200.