SP Tulsian's multibaggers: Dish TV, KCP Sugar

In an interview to CNBC-TV18 SP Tulsian of sptulsian.com picked two multibagger stocks and shared his outlook on the same. He sees Dish TV and KCP Sugar having the potential to fetch better returns going ahead.

The correction is stock price of Dish TV was due to profit booking post its second quarter earnings. But, with digitization soon to be completed in four metros, the stock can safely move to about Rs 90 in six months, he explained. "In the next couple of months, one can expect a price of Rs 84-85. At Rs 74 it makes a very good entry point for short-term investors," he added. He continues to remain positive on the sugar sector. He expects KCP to touch Rs 24 in the next six months. Below is the edited transcript of Tulsian's interview with CNBC-TV18. On Dish TV The biggest attraction in the stock is the correction after its Q2 numbers. The stock has corrected by more than Rs 10. I do not find anything wrong in their Q2 numbers. For H1 they have a top-line of Rs 1,000 crore, EBITDA margin of 29.65 percent and EBITDA of Rs 300 crore plus. They are the largest DTH player with market share of close to about 28 percent and about 14 million subscribers as on September 30 2012. They have been adding 0.5 million subscriber every year. With the digitization process moving ahead successfully and expectations that on October 31, digitization will happen in four metros, its next turn will be on the 1 million plus population cities where about 38 cities fall, for which the deadline is March 31, 2013. If there is extension of couple of months, the company is seen to be a big beneficiary. This is because DTH carries more than 80 percent plus market share while the cable companies have a market share of anywhere between 16-18 percent. The company being the largest player will continue to enjoy these kinds of benefits. Apart from this, they offer highest numbers of HD channels. The concept of HD channels has been catching up. They offer close to about 41 HD channels and have plans to keep increasing the number of channels. They have total of 400 channels plus services in their bouquet. The stock swiftly corrects by Rs 8-10 and again moves back for no reason. I do not think that the fundamentals keep changing on a weekly basis, so the corrections seen today is  largely because of liquidation of long positions or profit booking, because Q2 numbers were flat. Taking this opportunity, I expect that stock can safely move to about Rs 90 in six months. In the next couple of months, one can expect a price of Rs 84-85. At Rs 74 it makes a very good entry point for short-term investors. On KCP Sugar I have been keeping my positive stance on the sugar sector. KCP Sugar has two sugar mills in Andhra Pradesh with aggregate capacity of 13,000 tonne crushing per day. They have 50 KLPD distillery and 20 MW of cogen. Their financial performance in Q1 has been very good, but, the strange part is that in Q1 they had a realization of about Rs 26-27, in that season they booked profits in distillery and co-gen operations. They posted PAT of about Rs 12.5 crore with EPS of Rs 1 plus. The share has a face value of Rs 1. As on June 30, the company has inventory of about Rs 170 crore. There is an unrealized gain of more than about 25 percent on that. So, the unrealized gain is about Rs 40 crore. In this ongoing season, they will post good performance. There are not many issues with respect to sugarcane price. Because this company is making larger granules of sugar, so they fetch better realizations in the northeast market. Their realization is about Rs 1.50-2 per kg and that has always been the advantage to the company. Q2 will be more or less inline with Q1 with EPS of Rs 1 plus and with PAT of close to about Rs 12 crore. So, FY13 can give an EPS of maybe Rs 4.5-5. The share is now ruling at a PE multiple of 4 and even their book value is quite attractive at Rs 20. It is not a much leveraged company. They have a debt of close to about Rs 100 crore, which has been purely availed for financing working capital. I am keeping my positive stance on sugar mills, especially UP based, but this also looks quite interesting. One can expect a price of about Rs 24 in next the six months or so. Disclosure: I have no personal holding in any of the stocks discussed.