Daljeet Kohli & Amar Mourya first put a buy on Meghmani Organics on 6th August 2014 by calling it a “classic turnaround story”. At that time, Meghmani was languishing at Rs. 15.
The duo confidently predicted a target price of Rs. 34 for the stock, which was an upside of more than 100% from the then price.
Unfortunately, owing to Meghmani’s poor past track-record, Daljeet’s advice was cold-shouldered by investors. However, as the price kept inching up relentlessly, I diligently sent reminders and alerts, once when it surged 8%, and the other when it surged 17%.
On Wednesday, 5th November, the stock closed at Rs. 28.75, giving an incredible gain of 86% in the 3 months since Daljeet’s buy call.
Daljeet & Amar have now issued an update after the Q2FY15 results. They call the results “beyond expectations on all fronts”. It is also pointed out that the process of de-leveraging the balance sheet has started.
At the end of a detailed analysis, the duo has reiterated a buy on the basis that:
“At CMP of Rs.28, the stock is trading at EV/EBITDA multiple of 5.4x FY15E and 4.4x 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.”
So, if you don’t have Meghmani Organics in your portfolio, you need to take a close and hard look at it. You also need to take a close and hard look at two of Daljeet’s Diwali Dhamaka stocks, Ashiana Housing and Capital First. The sparkle in Daljeet’s eyes tells us that there may be hefty gains lying in store for us in these stocks as well.
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