Multibaggers ideas: Aashish Tater's two attractive bets

Anant Raj Industries, he says, can give 70% returns in the next 12-18 months. “We have a target of Rs 86.5.  It is a very safe bet at current levels,” he adds.

According to him, JK Tyre is an attractive bet. “It has got very limited downside. It can give you 30-40% gains in six to eight months,” he adds.

Below is the edited transcript of his interview with Udayan Mukherjee and Sonia Shenoy.

Q: You like Anant Raj Industries, what is the story there?

A: If you see the current market price of Anant Raj Industries, it is roughly available at Rs 50. If you see the debt situation of the company, analysts feel it is having a lot of debt. The company bought a 200-acre land parcel last year. That roughly led to a cash outflow of around Rs 825-830 crore. It will give them a development right of approximately 12.96 million square feet. The company has guided that they will be debt free eventually by 2013-14. That is going to be a largely positive.

If you see the focus of this particular company, they are focusing on lease rentals rather than new development properties. That will give them an earning per share (EPS) accretive of close to Rs 5.5-6 atleast for the next year. That means on Rs 6 EPS for next year, the company is available at eight times.

The company is going to get strong cash flows and will turn cash flow positive as per our estimates by 2014. That will be a large positive for a company which owns very good asset in the NCR region.

It is a very centric business in the northern parts of the country. But the way they own the assets and the land bank, we feel it is very safe in terms of net asset value. NAV is approximately Rs 122. Various brokerages are discounting it by roughly 25-30%.

We have become conservative. Earlier, we had a target of Rs 98. But because of the changing scenario, we now have a target of Rs 86.5.  From the current market price of Rs 50, that roughly gives you 70% in the next 12-18 months. It is a very safe bet at current levels. Even if you make 50-60% return in a real estate stock, given the current scenario, I think it is a very good bet from a longer term perspective too.