Sandip Sabharwal has recommended four multibagger stocks, namely, Triveni Turbines, L&T Finance holdings, Jain Irrigation and Manappuram Finance, for investment in his interview to ET Now.
Four Multibagger Mid-Cap Stock Tips Of Sandip Sabharwal
(i) Shree Cement:
Shree Cement is not only the most expensive stock in the world but it is the most expensive in the markets. As a commodity stock, it trades at above 45 times earnings and it is largely a reflection of the fact that the way they have controlled cost to boost profitability over the last many years which is quite amazing and that is why it is being rewarded by the markets. That said, given the structure of the cement industry today, given the fact that they themselves are looking at pretty rapid expansion of capacities and as cash flows are strong in the cement industry, the scope for positive surprise from here in my view is low. But it is a stock which has always surprise positive so I think those who are holding are unlikely to sell but I would not advice people who want to buy in new to buy into the stock at this stage.
It is a waste of time discussing Cipla. Cipla is something which has not performed. I do not think it is going to perform in the near term as there has been a lot of management churn also. Their strategies have gone somewhere extremely wrong. People keep on buying Cipla just looking at the stock price and comparing it with other stocks like it. I do not think it is going to move. If the markets do very well, the stock will may be remain where it is, if markets do not do well, I think it is going to correct further.
(iii) Jain Irrigation:
Jain Irrigation is clearly emerging as a star now numbers are looking strong. There is a huge operational improvement both in terms of control of cost as well as reduction in interest cost and the good point about the business of Jain Irrigation today is they do not need to do any capex for the next three-four years so they have capacities in place.
Last two years, Jain Irrigation was on the right track but they got hit by the worst kind of monsoon. So when macros turn so bad, you cannot do anything. I think macros are turning positive for the company now and they have already done a Rs 1.2 odd EPS for the first quarter and consensus estimates for this year are that the company will do a 210 odd crore profit as per the analyst who are trading. I think all indicators are that we could see the profits near Rs 300 crore this year and as that happens, the rerating will pick up and next year also interest cost will remain lower. There will be no capex. So the operating leverage itself will take earnings up by 30 to 40% next year also and the company is very well placed today. There still disbelief because of what has happened in the past but I think that disbelief is good for long term investors because it gives them time to accumulate the stock. By next year, I am seeing the stock doubling from here.
(iv) Top midcap investment ideas are Triveni Turbines, L&T Finance holdings, Jain Irrigation and Manappuram Finance. These mid-cap stocks will do very well over the next one-one and a half years.