Aashish Tater bets on 2 stocks for over 50% returns

In an interview to CNBC-TV18, Aashish Tater, Head of Research at Fortunewizard.com picks two stocks as his multi-baggers for the day. Tater pegs Andhra Pradesh Paper Mills' target price at Rs 285 and Chambal Fertilisers and Chemicals' target price at Rs 86.

Also read: India is a monkey mkt, dumping bullish stand says Samir Arora Below is a verbatim transcript of his comments on CNBC-TV18. On Andhra Pradesh Paper Mills Andhra Pradesh Paper Mills was on our recommendation list even in 2012 around the March levels when the stock used to hover around Rs 155-160 level. We had a target of Rs 350-370. We try to project through quant models like what could be the repercussions post the open offer method that actually goes for even eventual distribution and then takes a rally, which takes it to the next level. In last one year, during September, it hit that top of Rs 350-370 where our quant model closed this particular call. Now again, the stock has retraced one to one-third of its open offer price of Rs 544.90. The company has paid Rs 140 to the promoters firstly because of noncompetent fees. That means that at Rs 180, International Paper would not want the company promoters to come into the business and they paid Rs 140 just like that. That was paid even to the small shareholders. Apart from that, the business value was around Rs 400. Using the quant model, we found that 'W' pattern would get completed somewhere around Rs 174.50, which is roughly five-seven percent. It is not an advice that you should go and buy right now but you should be ready to cash this stock somewhere between Rs 165-175 zone from short-term perspective in six-eight months. Again you will see that retracement whenever market mechanism stabilises. These are shift towards stocks and areas where there were open offers. The stock would again go and retrace to that Rs 285 odd levels. When you are trying to invest into midcap or smallcaps, the risks are very high. That is why the returns should actually justify those kinds of risks you are undertaking. So, at Rs 165-175, the downside gets sized to Rs 150 odd levels because you will see a lot of people, who tender into the shares as well as who have booked profit around Rs 350-370 zone, would like to take support on this particular stock. The float is just 25 percent of the remaining and still the story remains intact because International Paper has got some very aggressive plans for the company. Given all these facts, you should be parking small amount into areas where there is relatively low risk. Whenever the market stabilises, this will outperform the index. Thus, this is a buy from our side for a target of Rs 285 from next six-eight months perspective. On Chambal Fertilisers and Chemicals We have been studying patterns of basically Chambal Fertilisers and Chemicals and many other fertiliser stocks. We feel that the story remains there but nothing happens to the stock price except that they are volatile by 50 percent on either side from their fair value. When we arrive at a fair value target of Rs 64 on Chambal Fertilisers and Chemicals, according to quantitative predictor, we found a very interesting pattern right from 2007 to 2011. Every year, the stock had corrected to almost 40 to 70 percent of their previous year's highs. The stock is giving me a target of Rs 43.80 as a yearly low, which is roughly Rs 6-7 from here. The stock goes to test 100 percent of their lows within next one year, which gives me a target of Rs 86. When we try to align the fundamentals to our quantitative predictors, we found two very interesting aspects. Monsoon for last two years have not been supportive. That means, either this year or next year, the monsoon would definitely be supportive. That is what the seasonal indicators are indicating, which will be positive for fertiliser companies. Second, most important thing was a statement from the department of fertiliser where they want that urea self-dependency should be achieved by FY17, which is going to be very positive for companies like Chambal Fertilisers and Chemicals. If you align these two factors, we feel that the sales will at least go 50 percent higher in next two years from current levels and the profitability will stabilise somewhere around Rs 400-450 crore. We were also looking at the promoter activities where we found that the promoter group companies are acquiring the stock somewhere around Rs 50-55 zone. Even in yesterday's disclaimer, they have bought around 3,28,000 shares that is the promoter group company. In last fifteen days, they have accumulated over a million shares. Given that Rs 44-45 will be the zone where our quantitative predictors end on the downside, I think the risk reward would be very beneficial for the company where we feel that Rs 73.50 and even Rs 86.80 could be tested within one year i.e. 12-15 months to be on the safer side because if the monsoon is better then the target looks likely achievable by May 2014. So, if someone wants to build portfolio and want to trade on technicals combining with fundamentals, I think this is one strategy that can be looked upon for investors. Disclosures: Safe to assume stocks may have been discussed with clients but no personal position.