Multibaggers: Aashish Tater's 2 picks for handsome returns

Aashish Tater, FortuneWizard.com has picked up Zee News and Tilaknagar Industries as his multibaggers for the day.

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Below is the edited transcript of his interview with CNBC-TV18's Latha Venkatesh and Sonia Shenoy.

Q: Why have you picked Zee News?

A: I would like to give a call on entire media space. When we picked the entire media space, NDTV was around Rs 40, TV Today was hovering around Rs 50 mark and many other media stocks were hovering almost 50 percent to their current levels. So, it is almost a 100 percent gain in less than six-eight months. We feel media, as a space, is not a sector for one or two year, but it is for people who can hold it for years.

Given the scenario that we are into, given the population we have, we think the total market cap of the media companies is relatively restricted, thanks to the ongoing development on the four metros’ DTH services. That will definitely benefit indirectly even to the media houses. That’s why we feel, as a sector, this is one area where the focus should be.

Taking a call on Zee News, if you see the entire business channel, we think Rs 360 crore of market cap is relatively undervalued, given that the revenues are close to Rs 300 crore. They also operate few other channels in the local geographies through 24 Ghanta and Zee Gantalu and others; in total, approximately 8-10 channels. Also, they provide content material to Zee Ltd for USA, UK, Euro area and Saudi Arab.

We feel media, as a space, is definitely going to be a promising bet where we have other top picks, given that there is a lot of rerating that will happen. Even stocks, where there is a strong management involved, will definitely get rerated in the space.

We have a short-term target of close to Rs 21-22 mark on this particular stock. But we feel, even from longer term perspective, the entire media space should be taken from an investment angle. Thus, parking a small fund in this particular stock would make a lot of sense.

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Q: What about Tilaknagar Industries?

A: Tilaknagar was recommended in January, when the stock used to hover around Rs 33. It has given you already 60-70 percent return. But still we have a buy call on this particular stock because of two-three recent developments.

First of all, if you see the Monday announcement, the company has entered into strategic alliance with Pernod Ricard. Pernod Ricard is number three globally in terms of volume sales. Pernod Ricard will allow Tilaknagar to manufacture and bottle its products and sell it off to Pernod Ricard. That is a very big development. I have studied the history of Diageo, United Spirits, McDowell and many other players and how they actually shaped out. First, they give a contract to small players, then they buy a stake, give them funds for further expansion.

The second thing that we like about this particular stock is its two main flagship brands Brand House and Savoy Club. Both these brands are one of the top players in their segment, though they cater to the lower segment. But now since the company has also forayed into high end spirits, which will again give them a very good recognition in terms of PE expansion, they are working with an EPS of close to Rs 5.5-6 for next year. That roughly discounts the stock at 10 times. Diageo will take a stock at 40 PE multiple. So, I don’t think there is any reason why there will be a downside on this particular stock from current levels, given 5 or 10 percent plus or minus.

This could be a very true potential multibagger, even from current levels. We have a target of close to Rs 85 mark from next six months perspective. But we have a longer term horizon on this particular stock too, given that now the company is even moving into high end spirits. When the capacity would ramp up, I think this could be a very good bet even from longer term perspective.

Disclosure: No personal positions, but safe to assume might have recommended the stocks to clients.