“Classic Turnaround” Multibagger Stock Of Dolly Khanna & Daljeet Kohli Is “Strong Buy”: Experts

Meghmani Organics gave 600% gain after Daljeet Kohli recommended buy

Young-timers may not be able to readily place Daljeet Kohli, the former Head of Research of IndiaNivesh.

However, old-timers will fondly recollect the golden days of yore when Daljeet would dive deep into the sea to find potential multibagger stocks. He would generously hand out recommendations to the novices waiting patiently on the shore.

Daljeet is now the honcho of a PMS Fund called Veda Investment Managers according to the charming Avanne Dubash.

He offers investment advice to millionaires with bulging bank balances and probably has little time for impoverished novices.

Daljeet Singh Kohli, Veda Inv Managers says
Structural changes taking place in Pharma sector
Regulatory issues likely to be resolved soon

— avanne dubash (@avannedubash) October 5, 2017

However, before he went incommunicado, Daljeet cherry-picked Meghmani Organics on the basis that it has “huge upside” and recommended that we buy it aggressively.

His logic was simple and impeccable:

“At CMP of Rs.15, the stock is trading at EV/EBITDA multiple of 4.4x FY15E and 3.9x FY16E estimates. In our view, the current valuations are significantly below 7.5x global peer average. On back of various available triggers (1) debt reduction, (2) margin expansion, (3) higher plant utilization, and (4) favourable business dynamics the stock is poised for re-rating. With revival in business cycle, we have assigned 5.9x EV/EBITDA multiple (21% discount to global peers) to arrive at FY16E based price target of Rs 34/share. Given the huge upside, we maintain BUY on the stock.”

In the few years that have flown past, Meghmani Organics has surged from Rs. 15 to the CMP of Rs. 100, putting massive gains of 600% on the table.

Dolly Khanna added Meghmani Organics to her arsenal of specialty chemical stocks

Dolly Khanna’s portfolio sparkles with several magnificent specialty chemical stocks like NOCIL, Thirumalai Chemicals, Dai-Ichi Karkaria etc.

Meghmani Organics was also given pride of place in the portfolio.

Dolly started off with 454,475 shares as of 31st March 2015. This was increased to 6,58,492 shares as of 31st March 2016. As of 31st March 2017, the holding stands at 10,20,665 shares. The present holding is not known.

Even if we had followed Dolly’s illustrious footsteps and bought Meghmani, we would have multibagger gains in our own portfolios.

[*C] Consolidated     [*S] Standalone
(Source: Business Standard)

Meghmani Organics is gearing up for strong growth and is “strong buy”: SMIFS

Thankfully, it is not too late for us to make amends.

We can still dive into Meghmani Organics and rake in a fortune according to Mononita Mitra of Stewart & Mackertich.

Mononita’s logic is also quite impressive and convincing.

The investment rationale is expressed in crisp language:

– Meghmani has a well-diversified product portfolio

– Vertically integrated across all value chains

– Pigments and agrochemicals enjoys strong global presence

– Meghmani to embark on major Capex to expand its chemical business

– Meghmani reduced its long term debt and will soon be a debt free company

– Meghmani is run by experienced and qualified management team and technical personnel

“Valuation: The company has undertaken aggressive expansion plans in the past few years and we expect that the installed capacity if run at optimum level would clock net sales of around INR2100 crore by FY19.

This could fuel big-time gains for the investors and considering all this we have valued the company on the basis of weighted average of Discounted Cash Flow (DCF), P/E and EV/EBITDA and arrive at a Target Price of INR140.”

The target price of Rs. 140 projected by Mononita Mitra translates into a whopping upside of 40% from the CMP of Rs. 100.

Stake buyback in subsidiary adds >20% incremental earnings: Phillip Capital

According to Phillip Capital, Meghmani Organics’ acquisition of 24.97% equity stake in Meghmani Finechem Limited from International Finance Corporation (IFC) is a sensible strategy.

Meghmani Finechem is said to be one of the most efficient producers of caustic soda in the country with EBIDTA around 40%. It is currently undergoing a value accretive capex plan including byproduct benefication projects of chloromethane and hydrogen peroxide, which should add value/efficiency further to its operation going ahead.

It is also stated that there is a shortage in the global caustic soda market which means that there is no dearth of demand.

It is also claimed that there will be a 20% value accretion for Meghmani Organics from Meghmani Finechem.

Philip Capital’s target price of Rs. 155 means that massive gains of more than 50% are waiting for us.

Meghmani Organics – Target Price – 155/- (+48% upside) Philip Capital Research Report ???

Meghmani Organics has acquired 24.97% equity stake held by International Finance Corporation (IFC) in Meghmani Finechem Limited (MFL) for a consideration of Rs 2,212 mn. ? pic.twitter.com/H1TGLeefJz

— Arvind (@Arvind2k) May 2, 2018

Meghmani Organics Is The Best Bet In Indian Agrochemicals Sector: BloombergQuint

According to Yash Upadhyaya of BloombergQuint, Meghmani Organics is quoting at cheap valuations compared to its peers and is a worthy buy given that it is expecting double-digit demand growth in the agrochemicals and pigment business.

Meghmani is also said to be targetting an annual turnover of Rs. 1800 crore by FY18 with commensurate margins and profits.

Meghmani Organics eyes Rs 1,800 crore revenue by year-end.https://t.co/lx9jgY5Ss0 pic.twitter.com/wER9IBl5IS

— BloombergQuint (@BloombergQuint) February 12, 2018

Conclusion

Prima facie, there is no option for us but to fall into line and obediently tuck into the stock. Our earlier defiant attitude of ignoring Dolly Khanna and Daljeet Kohli has cost us a pretty penny in terms of missed gains. We can’t let that happen again!