Expect 100% returns in Akzo Nobel: Ashish Tater

Expect 100% returns in Akzo Nobel in two-and-a-half years from the current levels, says Ashish Tater of Fort Share Broking.

Tater told CNBC-TV18, "Akzo Nobel, we better know this particular company for the flagship brand of Dulux. The parent company Akzo Nobel NV, the Dutch conglomerate which specialises into the paint industry and the specialty chemicals. I feel this company will definitely give good returns in days to come." He further added, "If I see the balance sheet of the company, on a marketcap of close to Rs 2,500 crore, the company is sitting into a cash and cash equivalent close to Rs 1,000 crore. That means if I adjust this particular cash with the marketcap, you are getting a company with the sales of over Rs 1,000 crore for next fiscal for just Rs 1,500 crore. This company is having an operating profit margin of close to 19% and a net profit margin of close to 15%. All of its cash and cash equivalents are invested into debt instruments." "Going forward, we feel there will be inorganic growth and consolidation into the paint industry. There will be only three to four players left into the industry and others would be either merged or taken over. We have betted looking into the balance sheet of the parent company where they acquired ICI recently three-four years back." "During the recession, this stock was not giving an s 500-550 support mark. From there, they have added close to Rs 100-120 in terms of bottom-line. So, here is a company that is available Rs 700-720 having a potential of almost 25-30% growth and is a potential candidate for open offer in the next two-and-a-half years. Looking into the consolidation of the company, I feel that the company is a true multi-baggier. If someone holds a time frame of close to two-and-a-half to three years, the target could be of Rs 1400." "There is a small catch into the company that the stock is highly illiquid. So, investors who have patience for two-three years should only be investing into the stock because this stock would not give you easy exit opportunities. Until and unless the consolidation comes, we are betting on to the stock." "Looking into the paint industry, every company is trading at a marketcap to sales close to 2.2-2.8 times. Even globally the parent itself is trading at close to 2.7 times marketcap to sales. This particular company, the subsidiary of the group, is trading at 1.5 times, if I adjust with the cash balance sheet." "I feel the stock can give 50-60% return from the next 18 months perspective. But if someone holds for two-and-a-half years also, the company can easily give 100% returns from current levels. The company is also giving you a decent dividend yield close to 2.5%. For a parent group like Akzo Novel, I think this is a must into one