Wendt India and Linc Pen are multi baggers: Aashish Tater

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Wendt India and Linc Pen are multi baggers: Aashish Tater

According to Aashish Tater, head of research at Fort Share Broking believes that Wendt India and Linc Pen are two stocks that are good bets with a long term perspective.

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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 Wendt BSE | NSE 29/05/12 Are Mutual Funds betting on Wendt? Other Stocks in this news Linc Pen and Plastics | Alfa Laval (India) | Carborundum Universal | 3M India | Kokuyo Camlin |

According to Aashish Tater, head of research at Fort Share Broking, Wendt India and Linc Pen are two stocks that are good bets with a long term perspective.

Wendt India

Wendt India is an exact proxy to Alfa Laval , where promoters were paying to acquire new companies at an annualized equivalent value of 11.5-12%. Now this is one stock which we have been tracking as a delisting candidate for the past year. However, we have now changed our view because we feel that this is a portfolio bet, not just a delisting candidate when it was hovering around at Rs 1000 mark. What interests me is that its parent Winterthur technology has been taken over by 3M India.

Now the company is promoted by two groups, an Indian promoter from the Murugappa group - Carborundum Universal and now 3M India which controls almost 78% share. I don't think any of these two promoters would like to reduce their holdings to that 75% mark. On the contrary, the company law board Carborundum Universal has actually been able to get a sanction for the open offer trigger. Therefore, even though there is no open offer for the company right now, I get the impression that the open offer will come soon. If that mandatory trigger happens, then there will hardly be any float left in the market.

Looking at it from a fundamental perspective, 3M India trades at 30 odd PE multiple, while its same group company is trading far below this range. Taking a call based on the annualized equivalent value which was paid to Winterthur technology, I think the fair value works out to Rs 1860 to be precise. Thus, there is good scope in terms of upside from current levels.

What will happen if the company does not get that clearance of open offer? The stock might correct by 8-10%, but that is the maximum downside for this particular stock. In terms of dividends, Wendt India paid Rs 25 last year. Therefore, this is one stock that should warrant portfolio weight from longer term perspective. Thus, we are very aggressive in suggesting that one should definitely go for a portfolio bet for this stock.

Linc Pen

Linc Pen is exact proxy to Camlin . Now what happened in Camlin is that the foreign players actually entered into the stock and has given a market cap to sales ratio multiple of almost 1.6 times which triggered an open offer. They were ready to pay Rs 110 a share for the 20% mandatory open offer.

From that perspective, the market cap to sales ratio for this particular company Linc is 0.25-0.3 times approximately. That means there is a chance of rerating in terms of market cap to sales ratio going forward.

Their Q1 performance was dismal and the stock currently in a battered shape. I think the worst case scenario would be around at Rs 56-58, from where people who are serious investors can definitely look into this particular stock. The main reason for the de-growth in terms of net profit is because of aggressive expansion plan and advertisement. They have actually hired Shahrukh Khan as their brand ambassador and that's talking a toll on their profits.

Going forward, looking at the way the company is foraying into the retail space, I think this will be a good proxy in the longer term to Camlin. They also have a joint venture with Mitsubishi so there is again a chance that a foreign promoter can come in this particular company which will raise the stocks significantly. Going through the same mathematics, I think the stock can easily touch Rs 95-100 in the next 15 months.