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Feb 12, 2013, 01.33 PM IST
Aashish Tater, Head of Research at Fortunewizard.com bets on two multibagger ideas in an interview with CNBC-TV18. He picks Century Textiles and Tata Global Beverages which may give you 100 percent and 25 percent returns in net 12-15 months, respectively.
Aashish Tater, Head of Research at Fortunewizard.com bets on two multibagger ideas. He picks Century Textiles and Tata Global Beverages which may give you 100 percent and 25 percent returns in net 12-15 months, respectively.
Below is a verbatim transcript of the interview:
Century Textile is ready to make a sharp upmove from current levels , almost 100 percent from current levels. There will be three major key triggers that would take this asset heavy company to its fair value at least once in next 12-15 months.
If you see the company's current capacity in terms of cement, by next year, it will be somewhere around 11.8 million metric tonne and this could itself fetch them a valuation of around Rs 7,500 crore.
The next big trigger is that the company is going to hive off its paper division to key players in the market. According to media report, it has to happen somewhere between Rs 2,200 crore and Rs 2,850 crore, which will again be a positive given that enterprise value is roughly around Rs 6,500 crore.
The recent announcement of phase I of its real estate project development of 6 lakh sq ft that company is going to go on rent basis will fetch them a pretext profit of almost Rs 100 crore from next year as it will take another six months for the company to complete their project expansion.
Here, you are sitting on a company that is going to do a cash earnings per share (EPS) of over Rs 60. This year the company will end with the cash EPS of Rs 30 though their worse negative on bottomline, because of high depreciation component this translates into Rs 30 of cash into this fiscal itself.
For next fiscal, we are forecasting Rs 60 of cash EPS and a positive EPS of around Rs 16-17. Given these all factors, we feel that the value of the equity player should not be less than Rs 7,350 crore in terms of marketcap. Within next 12-15 months, the stock is ready for a sharp upmove from current levels. We are pegging a very aggressive target of Rs 750 and even higher levels from current levels given all these positive developments that we expect over next 12-15 months.
On Tata Global Beverages
Last time, when we discussed about tea industry and Tata Global Beverages in specific, we had an idea that tea as a commodity will be rated to fast moving consumer goods (FMCG) product and that has been a key expansion for Tata Global Beverages . That is why it explains the rally that we had suggested from Rs 100 to Rs 150 in last one year where we recommended the stock.
We had a very aggressive target of Rs 250 from three year's perspective and now one year giving us 50 percent, we still feel that another Rs 100 can be made in next two years from this particular stock.
There are three rationales, any brand product, which has got an upward incline -- and the management is able to manage the commodity cycle -- globally has been able to get a marketcap to sales ratio of almost 3.5 times. Currently, the company would report the consolidated sales somewhere around Rs 7,600 crore for this fiscal and we are forecasting close to Rs 8,650 crore for next fiscal. The current marketcap of the company is roughly around Rs 8,700 crore mark giving you a forward marketcap to sales ratio of just one time.
Take a call when Starbucks stores start operating with Tata Global Beverages. If you see Starbucks on consolidated front, for every revenue they earn on a single dollar, they get a marketcap to sales of USD 4 i.e. one to four times the revenue itself because they have been consistent. Given that the Indian story for this particular kind of venture is much higher, we feel that particular asset for the company will be valued at almost a billion dollar if someone has patience to hold for next three-four years.
An asset, which itself can fetch you almost a billion dollar apart from your own asset, I think this is one stock which is a definite portfolio bet from longer-term perspective. We are still forecasting 25-30 percent jump year-on-year (YoY) for these kind of stocks. These are relatively low beta stocks given there is volatility into market and you want to hide into safety bets.
I think there will be a lot of support for these kind of companies because if you see whenever there is a global turmoil or anything happens, people try to take a safety net into these kind of companies where cash flows can easily be projected and valuations do look expensive. However, at 16-17 times, we feel there is still 20-25 percent arbitrage in terms of price to earnings (P/E) itself compared to global peers in the similar space. So from every angle, we feel the worse could be around Rs 130-135 for the year and the best is still to come for companies like Tata Global Beverages.
It is safe to assume stocks discussed have been recommended to clients.
Tags: Aashish Tater, Fortunewizard.com, multibagger ideas, Century Textiles, Tata Global Beverages, real estate, fast moving consumer goods, Starbucks
May 24 2013, 16:42
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