Aashish Tater joins CNBC-TV18 to cherry pick his favorite stocks for the day which he says are multi-bagger ideas.
He recommends Premier Ltd with a target price of Rs 180. The current price is around Rs 90. Trading at Rs 6-7 earnings per share, there is a good possibility of the stock rising up by 18% from current year EPS, he says. “There is limited downside to Premier.”
His second pick is Wabco-TVS . This stock has got tremendous potential going forward, Tater says. The stock is going to give a CAGR return of close to 20-25% year-on-year for next 3 years, at least in terms of visibility of topline and bottomline, he says. Wabco-TVS is the pioneer in air-brake manufacturing and most of the top players in the auto industry are Wabco’s clients. So, the fundamentals of the business are strong. As for the stock, it currently trades at a price-to-earnings multiple of less than 14 times. Tater recommends buying Wabco-TVS with a price target of Rs 1400. “That is easily achievable for the stock; I would advice buying at every dip in a 2-3year horizon,” Tater says.
Below is the verbatim transcript. Also watch the accompanying video
Q: The first one you have picked is Premier.
A: Premier Limited is one stock where I feel there is a limited downside. The company recently announced that they are willing to exit or jointly develop their free-hold land in Dombivali area which can give them approximately Rs 650-700 crore of free cash flow. This is much higher than their current market cap and debt in the book, that is, their enterprise value. Once the cash comes into the balance sheet, the company will be able to retire its debt which will give them an Earnings Per Share (EPS) of close to Rs 7-8. Currently, the company does Rs 6-7 of EPS and we expect another 18% rise in the current year EPS. So, from 2 years perspective, once the deal actually materializes, the company will be able to do close to Rs 15-16 odd in terms of EPS. Assign a PE multiple of Rs 12 for this particular stock, it gives you a target of Rs 180 odd. The stock currently is available at close Rs 90. A 100% jump can be expected over the next 12-18 months perspective. The company is paying a consistent dividend and I think this is a one stock which should be bought from a longer-term perspective though in small quantities.
Q: You also like Wabco-TVS, take us through why you like that story?
A: Wabco-TVS is another stock that we feel has got tremendous potential, going forward. A stock that is going to give you a CAGR return of close to 20-25% year-on-year for next 3 years, at least in terms of visibility of topline and bottomline. Now, they are the pioneer in this space of assistant air-brakes. Looking into the profile in terms of customers, all the top automobile companies, they are the main suppliers. Almost 85% of the market share is captured by them in the original equipment manufacture segment, and in the replacement industry, they have a market share of close to 70%. Such a market leader is available at a PE multiple of less than 14 times. It is definitely a buy on every dip for this stock and we have a medium-term target of close to Rs 1400 odd mark. I would still suggest that one should keep a very longer-term view. Thus, this is one portfolio bet which should be added on every correction whenever there is an anti-point for the stock for the next 2-3 years.
Source:moneycontrol.com
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