Tulsian's multibagger picks: United Phos, Coromandel Int

In an interview to CNBC-TV18, SP Tulsian, sptulsian.com picks United Phosphorus and Coromandel International as his multibaggers. He recommends buying these stocks with a target price of Rs 160 and Rs 225 respectively for the next six months.

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Below is SP Tulsian's analysis on both the stocks.

On United Phosphorus

I like United Phosphorus and recommend it for buying as an investor. If you take a call first on the business fundamentals of the company this is a global player, they have 23 manufacturing plants. They are India's largest crop protection products, intermediates, specially chemicals and industrial chemical makers. Out of 23 plants, they have 9 plants in India and rest in Latin America, Europe and China. In Europe, they have presence in each country.

They are also holding 50 percent stake in Advanta which is an agro chemical company. The present monsoon situation in India is giving an indication that we are going to see very good kharif crop. Also rabi crop, because of the water table rising across India is likely to be good and is likely to see good consumption or demand for the agro chemical crop protection products.

We usually see better Q2 and Q3 for these companies so one should not get too disturbed with the June quarter results which are generally on an average line. Looking at the financial performance of this company, they have a top line of close to Rs 9000 crore plus while EBIT has been at about Rs 1400 crore plus with profit after tax of close to Rs 750 crore.

The earnings per share (EPS) for the whole of FY13 has been at Rs 17. Q4 numbers have been very good, the stock has moved to level of Rs 160. Whenever we see this kind of good run-up, short-term investors try to book profits. So, the correction that happened by Rs 25 in the share price is giving an entry opportunity to the investors when the short-term investors are exiting from the stock.

FY14 is likely to be very good, I won't be surprised to see an EPS of about Rs 22 which has been at Rs 17 plus for FY13 giving 30 percent growth. Taking all this into consideration, one can expect a price of Rs 160 in next six months. I am not giving a very aggressive target though it can move to Rs 170-175 as well but Rs 160 should be the target which one can keep.

On Coromandel International

I have chosen this agro stock because Coromandel International is the second largest Phosphatic fertilizer maker in the country and are marketing close to 3 million tonnes fertilizer. Currently, they have four complex fertilizer plants in South India. In last one year they have acquired Sabero Organics and Liberty Phosphates. Sabero Organics is a crop protection company, Liberty Phosphates is a leading complex fertilizer maker having presence in Maharashtra, Rajasthan, Gujarat, Madhya Pradesh. So by acquiring this, the process of control or the acquisition of Liberty has just happened a month back and will get added in a big way to the financial performance of the company for FY14.

They also have four crop protection plants and therefore, this company is into complex fertilizer as well as crop protection. I am very positive on the agro chemical companies. I had recommended Rallis India also a couple of weeks back on the same theme that going forward you will have good kharif crop, you will see good rabi crop.

Considering the financial performance of FY13, when they posted top line of Rs 9000 crore with EBITDA of Rs 768 crore. Infact FY13 has been little dull for the company as they had some old contracts of rock phosphate at higher prices. However, now having acquired minority stake in foreign companies also in the African companies from where they source their raw material, it will give them advantage in the times to come.

I am expecting an EPS of Rs 20 plus for FY13. Despite lower performance, the company for FY13 gave a dividend of 450 percent on Re 1 face value share that is Rs 4.50. So the distribution policy has been very good. Infact the debt of about Rs 2200 crore in the books of the company includes Rs 450 crore because of preference share capital which has been issued by the company as a bonus share. So taking Rs 20 EPS good growth expected, better prospects seen for the crop protection companies and complex fertilizer the stock is likely to perform well and one can expect a price of Rs 225 in next six months.

Disclosure - No holding or interest in both stocks.