Accumulate Vesuvius India on every dip: Tater

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Accumulate Vesuvius India on every dip: Tater

Accumulate Vesuvius India on every dip. There is limited downside with definite potential upside of 200% from 3-4 years, says Aashish Tater, Head of Research, Fort Share Broking.

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Excerpts from Bazaar on CNBC-TV18 Watch the full show » ALSO READ See previous views by Aashish Tater See what other Experts & Brokerages are saying about Vesuvius India See messages about Vesuvius India

Accumulate Vesuvius India on every dip. There is limited downside with definite potential upside of 200% from 3-4 years, says Aashish Tater, Head of Research, Fort Share Broking.

Tater told CNBC-TV18, "Vesuvius India is just a proxy story that we have been pushing for Alfa Laval. In fact Vesuvius India has been one of my top picks right from 2009 when it used to hover around at Rs 100 marks. The reason was that annualize equivalent value that parent pays to acquire companies across the globe were much higher than what the company was available at. That means even going forward there is lot of potential."

He further added, "Now there has been a fundamental development for this particular company because it's parent Cookson, we all know about Cookson being one of the premier players in the refractory segment, they have actually considered to shutdown their operations in France and  other places and that business is going to flow into Poland, Czech Republic, China and India. Now if I take a call on refractory as a business for the domestic counter part it's suffering from tough times but still the company has managed a growth of 30% on topline and 40% on bottomline on year on year."

"Now take a call where a company would be doing Rs 570-580 crore for this fiscal in terms of topline, they would be doing 10% profit margin, which they have been consistent for last 3-4 years. So they will do a total profit of Rs 58 crore and EPS of close to 30 odd marks. So I think from Rs 30 at a price that is Rs 375 it's a definite buy because an MNC stock available at 11-12 times and with parented like Cookson and has a potential to get more orders from abroad because of its parent's connection and the parent is actually trying to shift for better arbiters in terms of cost efficiencies to places like India, China, Poland I think there are lot of things that needs to be looked down from 3-4 years perspective."

"These are portfolio bets and should be accumulated on every dip and even at current levels but one should definitely look this particular kind of stock from a longer time frame because an Rs 100 stock became Rs 375 in 2 years. We don't know that in next 3-4 years when parent would be shifting their operations again to these kinds of subsidiaries."

"They might end up doing Rs 50-55 of EPS from next 3 years perspective and these are thumb rule for MNC stocks whenever there are rumors of delisting or anything the stock goes and tests the PE multiple of 18-20 times. So I do not even try to look from that perspective of delisting because the parent hold just 55% but yes if the stock gets the PE re-rating in next 2-2.5 years when they would be doing Rs 50 EPS, I think this is a clear cut multi bagger and looking at it's current potential I think there is limited downside on to the stock with definite potential upside of 200% from 3-4 years."

Disclosure: It is safe to assume vested interest at firm wide level but no personal holding in the above stock.