South Indian Bank
South Indian Bank which is currently trading in the range of Rs. 22 to 25 has the potential to become 10 times bigger at Rs 250-300. South Indian Bank has been slowly growing in terms of branches and investing on loan books, which was relatively safe. It is a conservative bank with approximately 637 to be precise and targeting 700 branches by the year end. At a market cap of Rs. 2,800 crores, the stock is relatively undervalued.
South Indian Bank can be roughly valued at Rs 6.5 crore to Rs 7 crore per branch on the conservative side because it has got good asset quality though there was a slippage of one big number in the past Quarter which has now been reversed. South Indian Bank is expected to earn Rs 125 crore for the coming quarter and over Rs 550 crore for the full year.
South Indian Bank may replicate the story of other banks like Karur Vysya Bank, ING Vysya Bank and even PSU banks like UCO Bank, Vijaya Bank, Allahabad Bank etc. Once the banks reached more than 750 branches, their valuation got refined. South Indian Bank is the perfect proxy in this particular scenario.
South Indian Bank may cross Rs 1,200 by FY15-FY16 but as far as Basel III norms are concerned, it requires roughly around Rs 1,400 crore. So if one adjusts that, shareholders who are buying right now, would get at least 20-23% year-on-year (YoY) growth from next three-four years perspective. Any asset which gives you more than 20% growth from next three-four years perspective is a blind bet. Investors have hardly anything to lose on the valuation front with South Indian Bank. So a win-win situation for long-term players and that is why it should find a place in the portfolio (Ashish Tater multibagger stock pick).
Alembic Pharma is a good company. Though the Q1 results did not show much improvement in the topline, the pipeline looks strong since they have about 45 ANDA filings of which 20 approvals have come and the rest are awaited.Alembic has posted a topline of about Rs 370 crore for Q1 on which they earned a profit after tax (PAT) of about Rs 32 crore. That has given them an EPS of about Rs 1.70 on a face value of Rs 2. Going forward, in FY13 Alembic may show a growth of about 10-12% on the topline and about 15% in the bottomline, which may take its EPS to about Rs 750. FY14 should be a good year because by then they should be able to take their topline to about Rs 2,000 crore with EPS of about Rs 10.
Their promoter stake is also quite assuring at about 74%. At the current price, Alembic is quite attractive with a price target of Rs 75 in the next six months. It can be held on for a longer period of about 12-15 months and it can breach the three digit mark.(S. P. Tulsian Multibagger stock pick)
Techno Electric is into the EPC business and mainly for the power sector. In the last couple of years, the company has moved into wind power generation. They now have a total generation capacity of more than 200 megawatt. Their equity base is less than Rs 12 crore, to be precise it is Rs 11.5 crore. Their networth is about Rs 750 crore and the major portion of their networth has been diverted for power generation capacity.
This is the reason, inspite of having power generation capacity of more than 200 megwatts they don’t have much debt on their books. Their debt is anywhere between Rs 350-400 crore.
A significant portion of power generation commissioned in Q1 and that gets indicated from Q1 numbers also. Their Q1 topline is about Rs 195 crore with EBITDA at about Rs 82 crore. The EBITDA margin is 41%, PAT is close to Rs 42 and EPS is about Rs 7.20.
In the long term of next three-four years, they are expecting generation capacity to move to 600-700 megawatt and they have plans of making huge investments in T&D business since they have expertise in the power sector segment.
But going forward, even if the EPS for FY13 is more than Rs 30 and the kind of shift they have taken into power generation, this company gets placed as an EPC and power generation player. It is very easy for investors to take a call whether to place it in power generation space or EPC contract play.
For both the segments even if you take a P/E multiple of close to about Rs 8-9, which is getting applied to a profit making company considering their track record of declaring 150% dividend, the stock has good potential. It can move to Rs 225 in next six months and can see a price of Rs 275 to Rs 300 in next 12-18 months or so. (S. P. Tulsian Multibagger stock pick)