SP Tulsian picks Prozone Capital, Wanbury as multibaggers

In an interview to CNBC-TV18, SP Tulsian, sptulsian.com picks Prozone Capital Shopping Centres and Wanbury Ltd as his multibagger stocks. From a one year perspective, he expects the share price of both the stocks to move to Rs 60.

Below is an edited transcript of Tulsian's interview on CNBC-TV18

On Prozone Capital Shopping Centres
This company came from the hiving off from Provogue (India) or the restructuring of Provogue and now it is a joint venture company of Provogue and Capital Shopping Centre of UK. They are managing the regional shopping malls and can be called shopping mall owner or a real estate company as well.
Presently, the company has one mall at Aurangabad and two malls are coming up one in Coimbatore and one at Nagpur. They are also developing one residential complex in Indore. Overall the bouquet of the business or properties held by the company is into the real estate, having booked value of close to Rs 600 crore which is financed by the net worth of Rs 500 crore and small debt of about Rs 100 crore.
I call it as a real estate cum shopping complex company. If you see the Capital Shopping Centre, it is a UK company with market cap of close to 5 billion pound and have the expertise in managing the company. If you go by the shareholding pattern, 35 percent of the equity is held by Provogue and 55 percent is held by joint venture partner Capital Shopping Centre and some large high net worth individuals (HNIs) proprietary investors into the company. Collectively they all hold about 45 percent and 10 percent by various bodies, corporate and individuals which are falling in the category of HNIs. I am quite positive.
If you see the retail stocks, there are very few authentic retail players of a larger size that can be called as Pantaloon Retail, Shoppers Stop or Trent. Sometimes we see huge rally coming up in many other small textile retail stocks but they are not worth looking at. But if you focus on this company, they will continue to remain into the development of the regional shopping malls into may be tier II and III cities with focus on development of the property as well. So they have the flavor of both the retail space as well as the property space. The stock has moved a lot since listing at the present price. From here on, one can expect a price of Rs 60 in next one year with a very limited downside risk.

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On Wanbury Ltd
This is a pharmaceutical company mainly into advanced pharmaceutical ingredients (API) and formulations. Among the formation space they have 70 brands and have the production facility at three locations, one in Andhra Pradesh and two in Maharashtra at Raigad and Tarapur. If you see their product profile, they have 70 brands in their formulation portfolio and export to at least 50 countries across the world, 50 percent of those markets are regulated markets. So, one can understand the quality and the customers. They are the preferred suppliers for the top five API users in the world and are supplying API that is called a bulk drug. But for the last couple of years the company has been struggling, the bottom-line margins have come under pressure.
In the first half if you go by their financial performance of top line of about Rs 200 crore, they incurred a loss of about Rs 7.5-8 crore. But there is a gradual improvement and because of their focus shifting towards the formulations, as they have the brand value of about 70 products, they should be able to improve much better from FY14 onwards.
Considering the valuation parameters of the company, it has a debt of about Rs 300 crore and the market cap of the company is less than Rs 50 crore. So the enterprise value works out at about Rs 350 crore and is now valued in the market at a less than one time of the top line because top line for FY13 is expected to be Rs 400 crore plus. For FY14 it is likely to be Rs 460-470 crore. So the enterprise value of the company is less than one time and I am expecting improvement in the working of the company in future.
One should acquire these kind of stocks now, because if you have the manufacturing capability, if you have the product recognisations in the regulated market sooner or later either you will improve or somebody will come and take you over because beyond a point even promoters will not find it viable to run the plant. So in both the cases I see good value emerging into the stock, maybe from a three years perspective I expect that share can hit three digit mark but from a one year perspective, I expect the share to move to Rs 60 or so. Disclosure: I have no holdings in the stocks discussed.