A number of multibagger stocks have been recommended as being worthy of a buy now.
The stocks which are chosen have great fundamentals and are at inflection points.
Their valuations are also reasonable.
Suzlon Energy Ltd – 115% gain
Suzlon Energy Ltd is a potential multibagger stock with a gain potential of 115%.
This is as per the latest research report issued by Ventura Securities.
Ventura has issued an initiating coverage report on Suzlon Energy with a target price of Rs. 42.8.
The investment rationale on why the stock is a good buy is as follows:
“We initiate with a BUY rating for a target price of Rs 42.8 ( 12xFY20EV/EBIDTA). This represents an upside of 115% over the next 30 months.
We are optimistic on the company prospects given that:
Suzlons’ overall revenues to grow at a CAGR of 14.4% over FY16-20 from Rs 9562.5 crore in FY16 to 16392.4 crore in FY20, mainly due to an increase in volumes in the WTG business, an increase in its O&M assets and 21% CAGR growth (in external revenues) of its forging business.
– Stake sale in wholly owned subsidiaries will help raise cash to the extent of Rs 3350 crore. Further FCCB conversion and free cash flow generation would help lower debt by Rs ~4842 crore by FY20
– Healthy cash flow generation to cater to further debt reduction beyond the forecast period.
Vikas Ecotech Multibagger – 81% gain
Vikas Ecotech has been recommended as a buy by BoB Capital Markets.
The target price for Vikas Ecotech is Rs. 40 which provides a gain of 81%.
The reason why Vikas Ecotech will give multibagger gains is because of the following investment rationale:
“The Polypropylene (PP) facility was commissioned in the December quarter. This facility will be again operational in H2FY18. 2) VEL’s main customers of PP compounds are the white goods manufacturers. PP compounds are used to make outer casing of AC and Air Coolers. Due to this fire accident, the company has toned down their revenue expectations to ~Rs.50mn in FY18 which is ~32% of earlier estimation of ~Rs.150mn from this segment. 3) The company may see deferment in the orders of this product 4) Other four manufacturing units in the same factory have started their production 5) MTM capacity expansion for FY18 is ~6000 MT p.a. 6) Current capacity for MTM is 3,000 MT p.a.
We expect, growth in PVC industry, opportunities in export markets, capacity expansion and demand for toxin free stabilizers would create huge prospects for VEL’s revenue/ earning to grow at a CAGR of 34%/41% over FY16-19e. The stock currently trades at 17.4x/10.9x/7.7x of FY17e/FY18e/FY19e EPS. We maintain our BUY recommendation with a price target of Rs 40 implying upside of 81%. (14x on FY19e EPS).”
Manpasand Beverages – 48% gain
Manpasand Beverages also has multibagger potential.
Ventura has recommended a buy with a target price of Rs. 1067 which provides a gain potential of 48%.
The reason why Manpasand Beverages has the potential to give multibagger gains is because of the following investment rationale.
“Manpasand’s flagship brand, Mango Sip is growing by leaps and bounds and is expected to grow at a CAGR of 33.1% to Rs 1,408 crore by FY20. The recent backlash against carbonated cola drinks especially in the south and the upcoming Sricity facility (45-50,000 units on a 3 shift basis) will help mark the foray of Manpasand in the southern markets. This coupled with the shift in user preferences to healthier fruit based beverages would mean better demand dynamics for the company. This will not only add to revenues but help diversify its markets from being primarily north and west dependant.
FruitsUP, its fuzzy fruit drink has achieved great success with its Rs 10 sku. We estimate revenues from the same to grow at a CAGR of 42% to Rs 439.4 crore by FY20 from the current Rs 108 crore in FY16.”
Omkar Speciality Chemicals Ltd – 46% gain
Omkar Speciality Chemicals Ltd has been recommended as a buy by HDFC Securities.
The target price for Omkar Speciality Chemicals Ltd is Rs. 244 which provides a gain of 46%.
The reason why Omkar Speciality Chemicals Ltd is a good stock to buy now is because of the following reasons given by HDFC Securities:
“OSCL was facing three issues –
1. It underwent large capex over 2012-2016 without having liquidity margin for delay in commissioning of expansion due to environmental clearances. This led to liquidity issues for the company and the promoters pledged their shares to raise money for the company (beginning quarter ended Dec 2013). As the commissioning of the capacities got delayed, promoters came under pressure to repay the loans borrowed and had to sell their free shares to repay loans and unpledge the previously pledged shares. This unnerved some investors and the share price did not perform despite improving financials.
2. Environmental clearance for the Unit 5 plant took longer than expected. This resulted in bloated CWIP, lower depreciation and interest charges and postponement of revenues and margins from the new capacities.
3. The veterinary API intermediates business which was doing well did not get the required valuation (say in line with the likes of Sequent Scientific in India and Zoetis abroad). This prompted the management to demerge the division so that the division gets independent (higher) valuation.
While the third issue has got resolved with the NCLT tribunal approval being given on April 13, 2017 and the certified copy of the order having been received on April 28,2017, the promoters have also depledged most of their shares by continuing to sell their holding.
Some of the expanded capacities have now gone on stream and the results thereof are reflected from the results of Q2FY17. The balance capacities (Unit V) may soon go on stream.
We hence think that the company and its promoters are just coming out of a vicious circle and the stock price may now gradually rise reflecting this and the potential value unlocking due to demerger.”