Aashish Tater's 2 multibaggers to fetch you good returns

In an interview with CNBC-TV18, Aashish Tater, Head of Research at Fort Share Broking gives his views on select multibaggers like AP Paper.

Below is an edited transcript. Watch the accompanying video for more.

On AP Paper:

AP Paper International paper offered Rs 540 mark for the stock. If I take the same model, the stock can go and test Rs 135-140 mark on downside. This is a balance sheet clean up plus a small adjustment because now the foreign promoter and the company are in better hands. We feel the worst would be in the offing very soon. If I take a staggered purchase approach I would say that Rs 140-130 is on the downside.

What I will look into is what the percentage amount is as 75% is controlled by the foreign promoter. So from a two-and-half year perspective, even if I take a call that, yes, they have paid their value after doing good due diligence, the stock should be fairly valued somewhere around Rs 350 to Rs 400 and if I take a call from the marketcap to sales ratio, this is one company where most of the work is into the price and with another 15-20% because of the market carnage this will definitely warrant a buy.

So someone who is looking to build a portfolio from two-and-half to three years perspective and wants a very safe stock in this category, one company that fits the criteria from Rs 140-165 mark for a staggered purchase approach is AP Paper.

On Camlin:

Going through the same logic for AP Paper and Lumax we found Camlin is available right now at 33% of what the foreign promoter actually offered for the company. By the same multiple, 15-25% on a conservative side the stock could go and test Rs 26 to Rs 28 mark, which would definitely warrant a buy from a longer-term perspective. Now the company on a joint venture basis is targeting sales of approximately Rs 1,000 crore within four years that is roughly two-and-half times its current sales.

Here is a company where the balance sheet clean up is done, there is almost everything from the foreign promoter, including, all the technological expertise they are going to integrate their operational strength with the company