Multibagger picks: PN Vijay bets on Geometric, Allsec Tech

In an interview with CNBC-TV18, PN Vijay, a Portfolio Manager, picks two stocks as his multi-baggers for the day. PN Vijay likes Geometric Software and Allsec Technology. He predicts Geometric Software's target price to be Rs 145 and Allsec Technology's target price to be Rs 100 in the next twelve months.

Also read: Mkt to be choppy, traders can buy/sell intraday says Sukhani Below is a verbatim transcript of the interview: On Geometric Software Geometric Software is an interesting company. It is not like the normal Indian IT companies. They are more in the engineering space. They provide engineering solutions and different types of solutions mainly for the manufacturing sector. They have another product called Product Life Management where right through the life of a product they provide the software for the maintenance, for the profitability etc. Thus, that gives a continuing relationship for Geometric with its clients. Geometric has a very good joint venture (JV) with Dassault, which is very profitable. It is giving them good revenues and bottom-line for long time. A couple of weeks ago Geometric made another acquisition in Germany of a company called 3Cap Technologies. It is a specialist provider for the automobile sector and that is also expected to be very earnings per share (EPS) accretive. In the case of Geometric, I expect the whole year turnover to be about Rs 1,100 crore and the net profit to be about Rs 110 crore and the EPS to come in at about Rs 17-18 or so. At the current price of about Rs 115, it is attractively priced at about 7 times earnings. So, I am expecting Geometric to have a smooth ride on the basis of its business model and improving economic conditions in Europe and the US. About 75 percent of its turnover is coming from US, about 8 or 9 percent from India. So, on the current valuations, I expect the company to easily go up to about Rs 145 in next 12 months. There are no great risks associated with this stock as I can think of. On Allsec Technology Allsec Technology is squarely a midcap IT company in the Business Process Outsourcing (BPO) space and it is a remarkable turnaround story. They have about 3,000 odd seats spread over seven domestic centers and overseas. They provide BPO services to almost all the verticals - Banking, Financial Services and Insurance (BFSI), telecom, healthcare etc. The company had not been doing well, it was in the loss. However, they have done two very important things in the last 12 months. One is, they have rationalized the cost base and cut down the number of seats quite strongly even if it meant losing some loss-making clients. They have pruned down their business in a way. The second is, they have made a very strong acquisition in California. It services the mortgage lending and other types of lending in the financial sector to large banks, mortgage institutions etc. That came in with a strong top-line and strong bottom-line. As things have proved out, it has been a great boom for this company. All these good things are getting factored into the consolidated earnings of Allsec. For the year as a whole, I expect Allsec to have a turnover of about Rs 340 crore or so and decent profits of about Rs 17-18 crore. You must remember, the share has gone up a little bit because people are sensing a strong turnaround in this company. The share trades around more than Rs 70. However, even there it is a very attractive buy and it can go all the way up to Rs 100 in the next 12 months without too much difficulty. The risks associated with the stocks are, it is a low volume stock, so anybody can put out some news and turn the stock around. Operators can have a field day. So, one should remember that it is a low volume stock. Second is, too much of its fortunes are dependent on its California based subsidiary. So, if anything goes wrong there that will have a terrible effect on the Indian parent. Disclosure: No personal holding in the stocks discussed.