Look at Ballarpur Industries: Aashish Tater

Aashish Tater of FortuneWizard.com told CNBC-TV18, "Ballarpur Industries is available at a very attractive valuation and is no brainer. If you see the recent exit of the Sabah Malaysian Forest Holding that they had, the company will loose some Rs 800 crore odd sales in consolidated terms. That means that for this year they will be doing somewhere Rs 4,000-4,200 crore odd." "However, what interests me is the debt reduction that will take place. On a consolidated basis they will kick-off approximately Rs 2,000-2,200 crore odd of debt. So, if you remove the perpetual debt part, the company is sitting on close to Rs 3,500 odd crore of debt by December because that is when the deal will close. So, you are taking a company which will do 20 percent EBITDA around Rs 850 crore for next year available at a market cap of Rs 1,100 crore odd," he said. "Even if you add back debt, this is one company in the paper industry which we feel is terribly underpriced. Though the growth momentum is not there but the cash flow generation will be super strong because there is no capex plan for next two years. So, the cash flows will streamline in reducing debt and we see a further Rs 500-700 crore odd on conservative side and to an higher side of approximately Rs 1,000 crore of debt reduction over next two to three years." "When we try to take an overall enterprise value with something like international paper deal, we feel that this stock can easily rise by 100 percent but we are waiting for certain more triggers. So, right now we are taking Rs 25-28 as first target and Rs 35 as second target over next six to eight months perspective. We feel the company in the past has done buybacks whenever there has been strong cash flows streamlined and that can be done again this time," he added. "The promoters have not been selling. In last five years they have done I guess two buybacks somewhere between Rs 23 and Rs 24 and Rs 28. So that is going to be a key trigger going forward. We feel company is available at a PE of five times going forward which is relatively underpriced given the context right now the company will be in terms of balance sheet."