Multibagger Ideas: Two stocks that may give you 30% returns

SP Tulsian of sptulsian.com picks two stocks as his multi-baggers for the day. Tulsian is betting on Supreme Infrastructure India and Adhunik Metaliks. Tulsian predicts Supreme Infrastructure India's target price to be Rs 300 and Adhunik Metaliks' target price to be Rs 50 in the next twelve months.

Also read: Positive sentiment to continue today, says Udayan Mukherjee Below is a verbatim transcript of the interview: On Supreme Infrastructure India Supreme Infrastructure India is Mumbai based engineering and construction (E&C) company. They have presence in all verticals. They carry out the work for bridges, roads, railways, water irrigation, and dams. In fact, their Q3 numbers have been very good largely because of the higher topline. They have posted a topline of Rs 550 crore against Rs 1,330 crore for the nine months of the FY13. They have maintained the EBITDA margin at about 17 percent for the nine months as well as for the three months. I like the ramp up in the execution work in Q3 and I expect that to continue. They have a profit after tax (PAT) margin of more than 6 percent having posted PAT of about Rs 81 crore for the nine months, which translated into an earnings per share (EPS) of Rs 48.50 for nine months against Rs 21.50 for Q3. Generally, Q3 and Q4 are always strong for these construction companies. Earlier they were confined in the western parts of India but now they have their presence all over India. They have been very smartly executing and completing the work on time and that is the reason the consistency of the margin has been maintained. So, one can expect an EPS of close to about Rs 70 for FY13 and going forward for FY14 even if you take 10 percent growth, the EPS will be Rs 78. If I take their present book value, which is at about Rs 280 or so, it will ramp up to about Rs 300 by March 2013. So share is ruling at a price to earnings (P/E) multiple of three times and the price to book it is ruling at Rs 0.75. Looking to the construction contracts, there are a lot of execution problems as well as the debt, which is not seen in the case of these companies. So, the stock looks quite undervalued at a P/E of Rs 3 and price to book as Rs 0.75. The company is also smartly using their profits largely for financing the working capital by pruning the lower dividend. Promoter stake is quite respectable at 57-58 percent with 25 percent stake held by the high networth individuals (HNIs) and institutional investors. Taking a call on this, one can expect a price of about Rs 300 in next twelve months or so. On Adhunik Metaliks Adhunik Metaliks is an integrated steel player with the capacity of 4.5 lakh tonne in Orissa. One of their subsidiaries, Adhunik Power is setting up two units of 270 megawatt (MW) each. One unit of 270 MW in Jharkhand has recently commissioned the commercial production and the commercial operation date has been established. Another 270 MW unit is also expected to get commissioned in next six months but the effect of the first unit -- since that has commenced the commercial operation only in the end of January -- will get reflected in the financials of the next six months or so maybe starting from Q1 of FY14. Even the last two months of FY13 will not have significant contribution from the power division. If I go by their financials for first six months, they closed their 15 months ending June 30 for FY12 -- if you make the comparison, the EBITDA of 15 months is Rs 500 crore while the EBITDA now for six months has been at about Rs 290 crore on the topline of close to Rs 1,200 crore for the first six months against their Rs 2,300 crore topline for 15 months. If you take an EPS call for the first six months, they have an EPS of more than Rs 6 while the EPS was closer to Rs 2 for the whole of 15 months ending June 2012. So, the integrated operations of steel at Orissa is also showing a good ramp up because of their integrated nature of the business model. That is going to show a good performance in the time to come. The promoters have tried to focus their eyes more on these two projects i.e. integrated steel operations and the power projects. In fact, they have exited from the cement plant by divesting their entire stake totally. Now, the only concern remains in case of this company is that on the gross block of about Rs 5,000 crore as on December 31, they have the date of closure to Rs 3,000-3,500 crore. However, since the huge capex is lined up and that is all productive, we are not seeing any kind of defaults. The EBITDA of Rs 290 crore is quite reasonable. For FY14 June ending I am expecting that the company should be able to post an EPS of close to about Rs 15 -- Rs 11-12 from the core operations and maybe about Rs 2-3 from power operations. So the stock ruling at a P/E multiple of sub-Rs 3 and even the book value is quite respectable at about Rs 82-83 with promoters stake of about 58-59 percent. So, the stock looks good at the current price and one can expect the price of about Rs 50 in next twelve months or so. Disclosures: I have no holdings or interest in the stocks discussed.