Multibagger ideas: 3 stocks that have huge upside potential

Aashish Tater, Fort Share Broking is bullish on Atul Ltd, JBF Industries and Lumax Industries.  He feels these stocks can be multibaggers and provide good returns to the investors.

In Atul Ltd, he says, there can be a good chance of 30-40% return. JBF Industries, he feels, has 40-50% upside potential. "I would like to give a cautious call on all these stocks. These stock should not be bought on a jump at one go, but should be bought on every dip because these are low volume stocks. I think these stocks can easily give 30-35% return," he adds. Below is a verbatim transcript of his exclusive interview with CNBC-TV18's Udayan Mukherjee and Mitali Mukherjee. Also watch the accompanying videos. Q: Let us start off with Atul Ltd that is one of the stocks you like and are recommending today. A: Atul Ltd is one call from our side both from fundamental perspective and technical perspective. If I look into the financials of the company, the company is going to post close to Rs 98 crore of profit for this fiscal and is available at a market cap of Rs 550 crore. If I closely look into the balance sheet of the company, the company is having an investment and cash equivalents of close to Rs 200 crore. That means that a company is going to post an earnings of close to Rs 98 crore in terms of bottom-line is available on a adjusted market cap close to Rs 350 crore. Now, very recently for last six months there have been rumors in this particular stock that the promoters are likely to monetise the land that is available, free hold land available in Atul, Gujarat based area. That will give them a cash flow of close to Rs 200-250 crore. There have been denials from promoter side, every time they have been asked for. But if I look into the disclosures from their side, a) they have revoked these particular shares from the margin. Secondly, they have increased their stake into the company, from 41% to 43%. So, we feel that the land can be monetised between next six-eight months. Here is a company that is available at Rs 350 crore adjusted market cap, where the land can be monetised easily for Rs 250 crore. Taking a valuation call from a perspective of a fundamental aspect, this company has recently acquired Polygrip which is going to double its capacity. And that will be valued close to Rs 35 crore in the next two to two-and-a-half years. So, this is additional benefit to the company. Taking a fundamental call on their core business itself, the company is going to post a bottom-line close to Rs 98 crore and we feel that the raw material cost has actually peaked out for the company. So, for the next year, the company would do close to Rs 110-115 crore of profit. So, we feel that these are 20-25% upside on fundamental aspect itself. Also, if these any development on land monetisation because the promoters are slowing acquiring the stake in the company, we feel that the stock can easily test Rs 300 mark. Still these are huge land that is available for Atul that is close to 1300 acres. I have been told close to 400-500 acres can be easily monetised. We feel that the company can easily realised close to Rs 200-250 crore from this land monetisation. So, this is one stock where the downside can be seen till Rs 170 levels that is just 10% from current market price. But there can be a good chance of 30-40% return into this. The company has been a consistent dividend payer. On the longer term, we feel that this stock is a clear cut multibagger. If all these things works out, shapes out well for the company, the stock can even go to Rs 500-550 levels from two to two-and-a-half year perspective. Q: JBF Industries, why you like that story? A: JBF Industries is a call from our side because we have been bullish into the textile space as a whole. Thanks to cotton prices, we feel there will be further switch into the polyester business. JBF, after Reliance, is the second largest player into the space in India. But before I take a fundamental call into this, I feel there is something hidden into the balance sheet of the company. JBF Industries actually bought shares from Citi, JBF Pte 30% stake at close to USD 104 million last year. That means entire subsidiary of the company is valued at close to Rs 1,200 crore. What feel that the company is actually going to list JBF Ras Al Khaimah, a joint venture between the prince of Ras Al Khaimah and JBF Industries, in coming months into Singapore. These two developments make me feel that there is no downside into the stock, but a potential 40-50% upside. Now, if I take a fundamental call into the stock, the company is going to post close to Rs 32-33 EPS on standalone basis. Close to Rs 65-70 in terms of consolidated EPS because it