Dredging Corp looks interesting, see upside: Aashish Tater

Aashish Tater of fortunewizard.com told CNBC-TV18, "Dredging Corporation India could be a very interesting play. Small changes can take this stock almost to double levels. With Rs 1,000 crore market cap, the government public sector undertaking (PSU) which is almost a monopoly in the PSU space is available at mouth-watering levels. At Rs 370 Dredging Corp has a Rs 1,000 crore market cap with Rs 300 crore to be released from what they have expanded in the Sethusamudran project, because that project was stuck. So, you are getting back that Rs 300 odd crore may be in the next three months or six months. But that will change the entire requirement for the company in terms of working capital as well as capital expenditure (Capex)." "There have been a very smart move by government of India in order to revive PSUs, stabilise PSUs or even expand the concept of making it a competitive edge. Yesterday, news on Shipping Corporation of India (SCI) was very interesting. If it passes on, then this could be a very big thing. We identified similar patterns when SCI was around Rs 50-55 and we had a target of Rs 72-77. Based on those patterns only, our model suggests that Dredging Corporation could be the next move from government’s side where a lot of orders can come in because of the Ganga Namami project. There was a news four or five days ago that the Clean Ganga Project has not been able to do anything so far. But going forward, the road map is set, Rs 30,000-40,000 crore needs to be expanded over next three to four years. A large part of that is on the Dredging side, somewhere around Rs 4,000-5,000 crore should come into the PSU because we are working with Rs 60 percent of the order flow coming to Dredging. So, that could be one big trigger which is off the balance sheet right now," he said."The company will be able to do Rs 18-20 of earnings per share (EPS) next fiscal and trading at 20-25 times. It has been trading in the range of 24-25 times price to earnings ratio (PE) forward. So, that takes the company to Rs 470 odd levels with Rs 300 crore coming back to the balance sheet. That will be added back in terms of analysts estimate. It can take the stock further higher.""There are some key triggers that are being awaited, but once that materialises, the price will not be here, what it is trading at. So, it is better to take a small bet at current level and let the development happen and accordingly increase the position in the stock as and when the situation arises. But we feel that this stock from that angle has got limited downside because it is hovering between Rs 330 and Rs 450 zone. So, from risk reward perspective, we feel there is very good potential upside compared to downside. So, on a risk reward front also it looks very interesting," he added.