Multibaggers: SP Tulsian bets on ING Vysya Bk & CESC

In an interview to CNBC-TV18, SP Tulsian of sptulsian.com picks ING Vysya Bank and CESC as his multibaggers for the day. Tulsian pegs ING Vysya Bank's target price at Rs 630 and CESC's target price at Rs 310 in the next six months.

Also read: Market looks ready for short-term bounce says Sukhani Below is a verbatim transcript. On ING Vysya Bank ING Vysya Bank is owned by the Dutch ING group, which is holding 30-40 percent stake in the company. Looking at the financial performance for the first nine months, the bank has posted a profit after tax (PAT) of Rs 443 crore while PAT for FY12 was at Rs 455 crore or so. It resulted into an earnings per share (EPS) of Rs 29 for first nine months of FY13 while it was at Rs 32 for whole of FY12. That means it is likely that Q4 will be having an EPS of close to about Rs 10. So that will make the EPS of FY13 at Rs 39 or maybe Rs 40. There has been gradual improvement of about 2-3 percent in the bottomline of ING Vysya Bank every quarter sequentially. That is the reason that for Q3, the EPS has been closer to about Rs 11, which was Rs 10 for Q1. I am expecting that this trend is likely to continue. FY14 should have an EPS of closer to Rs 44 that translates into a price to earnings ratio (P/E) multiple of closer to about 13 times based on FY14 earning. If I take their current book value and extrapolate that as on March 31, 2014, it is ruling at a price to book of 1.7. The asset quality has improved in the Q3 with lowering of the gross non-performing assets (NPAs) as well as owning of the net NPA. The bank has closer to about 550 branches, which has a strong foothold. As I said, the price to book, earning multiples are quite low. Some of the private sector banks have not largely participated in this rally along with the other private sector banks. This seems to be one such stock, which is likely to do well in the times to come. So, I expect the stock can move to about Rs 630 in next six months or so. On CESC This stock gives a lot of trading opportunities if you are a short-term investor. That means you can buy at a lower level of Rs 270-275 - currently ruling at Rs 265 – and you look to sell the stock at more than Rs 300. This kind of trading range has been seen in the stock for last one year or so. We see the stock correcting, in fact this time it has corrected much more than what we have seen on the previous occasions where it has held a level of Rs 275. Since it has now corrected at Rs 265, I do not think that there is much downside seen. The overall negative perception on the power generation companies does not apply to this company because this is an integrated power utility company having their own coal mining, transmission and distribution facilities. They have 25 lakh customers in Kolkata and Howrah. Apart from that, they have the present generation capacity of 1,225 megawatt (MW) at four locations. Company is setting up two plants of 600 MW each one at Haldia and second is at Chandrapur near Nagpur. So, those capacities should also be operational in next twelve months or so. The company has a very good financial position with a P/E at about 7 times based on the FY13 earnings. Even the debt position is not very high, it is closer to about Rs 1,200 crore or so. However, they have ventured into the unrelated things, that has resulted in the stock correcting so much in these last three months or so. Now, the stock seems to have bottomed out. This makes a good entry point and one can look for a target of about Rs 310 with a time horizon of about six months. Disclosure: I have no holdings or interest in the stocks discussed.