Buy Sandesh on dips, says Ashish Tater

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Buy Sandesh on dips, says Ashish Tater

Buy Sandesh on dips, says Ashish Tater, Fort Share Broking.

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Excerpts from Bazaar on CNBC-TV18 Watch the full show » ALSO READ See previous views by Ashish Tater See what other Experts & Brokerages are saying about Sandesh See messages about Sandesh Sandesh BSE | NSE 31/05/12 Are Mutual Funds betting on Sandesh?

Buy Sandesh on dips, says Ashish Tater, Fort Share Broking.

Tater told CNBC-TV18, "Sandesh is a Gujarat based Patrika Samachar. It is the second largest regional daily player after Gujarat Samachar. A look at the financials of the company shows that they have actually lent out close to Rs 85 crore to the promoter group Sandesh Procon Pvt Ltd. Along with that, they are sitting on cash equivalent close to Rs 120 crore. That means at the current marketcap, the company is having almost 70% in terms of cash and cash equivalent. The company has four printing presses available. They distribute one million papers on a daily basis."

He further added, "They are a sure shot multibagger from current levels in the sense that the company can easily give 40-50% in a very short span of time because we feel that the promoters can actually come with an open offer. Last time they came with an open offer close to Rs 185 but the company did not get a tremendous response. Now, Sandesh Procon Pvt Ltd is about to complete its real estate projects. I personally feel that they can be merged if the stocks of the company are bought back by Sandesh Ltd itself."

"If I see its four properties in Bhavnagar, Rajkot and other places, I feel the stock is definitely undervalued from a core business perspective. On a longer-term, the stock should test close to Rs 500 which is almost 60-70% upside. But at that point, if the promoters make a move to merge the Sandesh Procon Pvt Ltd company with itself, the stock could be a true multibagger. So they are available almost close to their cash levels. They have the potential to become a multibagger because of promoters who have been consistently doing good for the company. If I see their financials, it would post close to Rs 45-50 of EPS for this fiscal. That means the company is available at a PE of 6 times going forward."

"From a year's perspective, they would be available at the current cash levels itself. Plus, this is the potential upside of the real estate business getting merged in some ratio with the promoters. That is why the stock came out with an open offer sometime in 2007. Now they are available almost close to cash levels, has a potential upside with limited downside. We feel the stock should be bought at every dip from a longer-term perspective."