Multibagger ideas: Two stocks that can give you 25% returns

SP Tulsian, sptulsian.com has picked up Tata Coffee and Kalpataru Power Transmission as his multibaggers for the day.

For Tata Coffee, he has a price target of Rs 1,200 in six-eight months, over 25% returns. He also expects Kalpataru Power to give 25% returns in 12 months. Houseviews: Investment ideas to play stock market today Below is the edited transcript of his interview with CNBC-TV18's Udayan Mukherjee and Mitali Mukherjee. Q: Tata Coffee, what is the story there? A: After CMC, I like this number the most because not much of the quarterly results have come in. The third could be the Thirumalai Chemicals, but that’s a small company. So, I am enthused by Q1 results. I am giving a buy call with a price target of Rs 1,200 maybe in six-eight months. If you see the features of the company, this is the largest integrated tea-coffee plantation company in the world with 19 coffee estates and seven tea estates. If you break-up the results, Rs 275 crore top-line has come from the global operations and about Rs 138 crore profit after tax (PAT) has come from the domestic operations. If you see the earning per share (EPS) of Rs 15 and the absolute number of PAT of about Rs 32 crore, Rs 24 crore has come from the Indian operations and Rs 8 crore has come from the global operations, Eight O'Clock Coffee. That means Eight O'Clock Coffee has turnover of global to ratio of the top-line is 2:1, while the bottom-line ratio by the global and Indian is 1:6. I am expecting Eight O'Clock Coffee to catch on. That is not contributing much to the bottom-line. If you see on a comparable basis also, the EPS has moved from Rs 7 in Q1 of FY12 to EPS of Rs 15 in Q1 of FY13. So, much improvement is likely to be seen in case of Eight O'Clock Coffee in the time to come. Coffee market globally has been quite firm and that is keeping this stock quite alive. Taking all this into consideration, I am quite bullish. You can call it a high-beta stock. I am expecting now that with this result, it will come in the trajectory of four digit mark and then gradually move to about Rs 1,200 in six-eight months. Q: What about Kalpataru Power Transmission? A: It is a very interesting story. It’s a EPC contracting company for power, transmission and distribution, cross-country pipelines, oil and gas field surface facility, railway projects. If you go by the FY12 performance, the top-line is close to about USD 1 billion and the PAT is about Rs 190 crore. That translated into an EPS of Rs 12.50. Even the dividend payout has been quite good. The company has declared a dividend of 75%. Looking at the order pipeline of the company and the fresh inflow, I am expecting that maybe for FY13 company should be able to post an EPS of Rs 15. The book value by then will be close to about Rs 130-132. So, share is ruling at a PE multiple of close to about six, price-to-book of 0.6. The shareholding pattern, consistent performance and size have been quite comforting. But because of the PE contraction, the share has all been languishing lower. But I think that from hereon again the risk is quite low. You don’t have much risk from hereon to fall. One can safely expect a return of close to about 25% in next 12 months or so. Disclosure: I have no personal holding in the stocks discussed.