Tulsian's multibagger picks: Dharani Sugars, Torrent Pharma

In an interview to CNBC-TV18, SP Tulsian of sptulsian.com picks Dharani Sugars and Torrent Pharma as his multibagger stocks.

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

On Dharani Sugars
Dharani Sugars is present in Tamil Nadu and has three integrated sugar mills with combined capacity or 10000 TCD for sugar, about 37 Megawatt (MW) for cogen and about 160 kilolitre per day of distillery. Considering financial performance of the company in first half, they posted a profit after tax (PAT) of close to Rs 21 crore which was at Rs 10 crore plus for whole of FY12. That means they posted double PAT in the first six months from what they earned in FY12 of the whole year. The only problem with the company is high debt.
The debt is Rs 300 crore and if I include the working capital loan also, which is backed by the inventory they have a debt of about Rs 400-450 crore. That’s why we see a very low market cap of the company at Rs 150 crore. If you take a call on the sugar cycle, Uttar Pradesh is facing a little problem because of the higher cane prices and lower realizations but Tamil Nadu sugar mills are likely to do well. They will see increase in production and the advantage with Tamil Nadu sugar mills is the availability of longer crushing season,  some 270-300 days as against UP which has only 160-180 days. Also Read: Houseviews: 4 stocks brokerages are bullish on
Going by the financial performance and having seen an EPS of about Rs 7 in the first half of FY13, the EPS is likely to be around Rs 12-13 for whole of FY13. But I have a positive stance on the working of the company company for FY14, as I see good results coming in from all Tamil Nadu based sugar mills. It is not only with respect to Dharani but when you make a comparative valuation, may be the stocks like EID Parry or Ponni Sugars look quite cheap compared to any two other stocks. So one can keep a view of one year but six months price target is around Rs 54. On Torrent Pharma
I have chosen many Pharma stocks in the past like Strides Arcolab, Wockhardt and now I picked one more as a New Year pick for whole of calendar year 2013. This is a Torrent Group company and has good presence in the formulation and APA segment having three plants in Gujarat, Himachal Pradesh and Sikkim. The financial performance has been fabulous for first half of the company. They had an EPS of close to Rs 25 against Rs 34 EPS in whole of FY12 with PAT of close to Rs 210 crore in the first half of FY13 against Rs 260-270 crore in FY12.

For FY13, the EPS is likely to be close to 50 plus but FY14 is going to show big growth in terms of top line. It is likely to be around 15-16 percent but on bottom-line I am expecting a growth of 20 percent plus, so FY14 should see an EPS of close to Rs 60. Going by the share price now at Rs 730, very high promoter stake of 72 percent, debt free status of the company, I find this stock quiet cheap. May be for 12-15 months one can expect a price of Rs 1000 plus but for six months I have given a target of Rs 850 on the stock. Disclosure: SP Tulsian has no holdings in the stocks discussed.