SP Tulsian Multibagger Picks for 2011

January 5, 2011   ·   0 Comments



On Career Point:

Career Point provides tutorial services to engineering and medical students. On the financial performance the company, it is sitting on a cash of about Rs 60-70 crore. They earn practically their annual income in the first three-four months alone. Practically, the entire amount remains with the company.

The company thought of moving into allied services. They are setting up a campus of about 8.5 lakh square feet which will be used by the company for students to stay and other services. The cost of that is about Rs 60-70 crore. The entire amount will be met from internal accruals.

The education sector has been doing well. The best part that I like about the company is that when we talk to the management, they are expecting a CAGR of 30% plus on topline and bottomline though they are more optimistic on the bottomline. They expect it to grow maybe 35-40%.

That’s the attraction in the stock that if a company can post a growth of 30% over the next four-five years, I think this is quite an excellent growth expected from Career Point. If you see the share price moving about Rs 650-700 post listing, now it is ruling close to about Rs 400 or maybe from current levels the stock has capacity to give a return of about 25% in 2011.

On Sharp India:

Sharp India makes consumer electronics goods. If we see the financial performance of the company, I don’t think anybody will really be too enthusiastic because for FY11, their topline is close to about Rs 130-140 crore while their bottomline of close to about Rs 2 crore. The equity of the company is Rs 26 crore and is a debt free company.

They have an (EV) enterprise value of about Rs 80-85 crore. If I go by the past records of the company, those who have turned around or have grown big with the principal or the overseas promoters decided to grow it big.

Probably this is with that view that this stock can be bought with a view of about six-12 months. Sometimes, we see that any corporate developments like a delisting move or increasing the product range or maybe increasing the volume and size of the company can lead to a huge surge in share price.

I won’t be surprise if the share can be held for a one-year view, even if it gives returns of about 100%. 80% of the stake is held by Sharp Corporation of Japan. The downside is very limited but you need to wait by giving it a timeframe of about of 6-12 months to see a big upsurge in the stock price.

On BS TransComm:

They have made their IPO at the price of Rs 248. They have to go for a reduction in the price band. If you see their product profile, they make telecom and power transmission equipments. Apart from providing hardware, the company also provides solutions to the tower business for which they have acquired one-two IT companies.

The company is increasing their capacity of tower making from 36,000 tonne to 240,000 tonne. Part of that capacity has already become operational. They are going for backward integration also, with their own structural deals and that has started reflecting in their financial performance.

In H1, they have already shown a topline of close to about Rs 370 crore with bottomline close to about Rs 18 crore which translates into an EPS of about Rs 9 on expanded equity. If I take a call on FY12, they probably will be having a topline of more than Rs 1,000 crore and an EPS of close to about Rs 25.

Because of the bad record at the time of the IPO, the share is now ruling practically at 50% of its issue price. So this is the entry point where one can take a call on this stock with a view of six months. I don’t think there is much downside from hereon and because of the huge potential we see in the tower business, the company is likely to do quite well. I am holding a price target of about Rs 200 in the next six-eight months time.

On Kirloskar Electric:

This is a capital goods company. If you see their product range, they cater to practically the entire core sector. They make transformers, diesel generator sets, capacitors, power control panels and transmission line equipments. Recently, they tied up with Nuclear Power Corporation to make motors for nuclear power projects.

Going by the financials, they have a topline of close to about Rs 1,200 crore for FY10. The company has posted an EPS of close to 10. If I take their marketcap that’s low at Rs 350 crore with enterprise value at about Rs 500 crore on a net worth of Rs 175 crore.

The company has 11 plants located in Maharashtra and Karnataka. In the past, they sold one of their plants at Bangalore and have been able to put their financials in place. I am not taking a call on the real estate value of those 11 plants of which three-four plant can easily get spared land which can get monetised even if I focus on the core sector, the topline of Rs 1,200 crore against enterprise value of Rs 500 crore.

The only thing is that in the current year, for the first half, they had some margin pressure but unless and until you have your product in place, you have your topline in place, margins can always increase or get ramped up in due course of time. So taking into consideration the share available at a price to book of 2 and in my view share at Rs 70 looks quite undervalued, it has potential to move to about maybe Rs 120-150 in this calendar year.

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Rajesh Singla

Rajesh is the founder & CEO of Stockssavvy, Stocks analyst,financial advisor by choice,software engineer by fate,biker,gamer,cricket lover n enthusiastic person. He believes in doing things not just to get by but to get Ahead...

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