5 Textile stocks likely to be multibaggers

In continuation of my pursuit for treasure, here are 5 more stocks (all belonging to textile sector), which might prove to be multi baggers going forward in 2013. These are as below:

 (1) Raymond                          - presently Rs.  445 (At year's high) (1st target - 600 in 1 year; 2nd target - To be decided after it reaches 600 and market conditions prevailing at that time) (closed at (1) Rs. 395 on 13.09.94 (2) Rs. 604 on 03.05.06).  (see BSE charts)

 (2) AB Nuvo                          - presently Rs.  1070 (At year's high) (1st target - 2400 in 1 year; 2nd target - To be decided after it reaches 2400 and market conditions prevailing at that time) (closed at Rs. 2385 on 15.01.2008) (see BSE charts)

(3) Brandhouse retail            - presently Rs.  14.65 (1st target - 21; 2nd target - 27; 3rd  target - 37; 4th target - 54)

(4) Nahar spinning                - presently Rs.  67 (1st target - 200 in 1 year; 2nd target - To be decided after it reaches 200 and market conditions prevailing at that time) (closed at Rs. 682 on 30.03.92).  (see BSE charts)

                                                                   and 

(5) Vardhman textiles           - presently Rs.  250 (1st target - 425 in 1 year; 2nd target - To be decided after it reaches 425 and market conditions prevailing at that time)

                             

Umang Dairies Ltd. (Multibagger in the making)

In continuation of my pursuit for treasure, here is another idea (again from the world of equities), which might prove to be a multibagger and that is Umang Dairies Ltd., presently quoting around Rs. 61. I shall discuss the same in my future posts.

Winsome Diamond vs. Gitanjali Gems

Continuing my discussion on Winsome Diamond, if one compares Winsome Diamond valuation with that of Gitanjali Gems, one finds that Winsome is quoting at a huge discount to Gitanjali. Based on Mar’12 net profits of 258 crores and EPS of 28.35, Gitanjali is quoting at a P/E of 15.7 based on last quoted price of around Rs. 445. Whereas, Winsome Diamond, based on Mar’12 net profits of 96 crores and EPS of 9.35, is available at a P/E of only 3.55 based on last quoted price of around Rs. 32.

Gitanjali is a very strong brand and shall command a premium in the stock market as compared to lesser known brands.

But, if you compare the sales of Winsome with that of Gitanjali, Winsome is not far behind and hence must have brand value of its own (Winsome sales for Mar’12 stand at 5546 crores  vs. 7745 crores of Gitanjali).

(1) Based on valuations by P/E method, Winsome has the potential to reach a P/E of around 10 (much less than 15.7 of Gitanjali). A P/E of around 10 should take its price to about Rs. 95 (close to its high of around Rs. 115 in 2007 bull run).  All time high of Winsome is more than Rs. 400 in eighties.

(2) Based on Enterprise Value/Revenue or market capitalization vs. sales (say MC/S) ratio method, a stock that enters bull phase, this ratio reaches around 2 and may even go up to 5-7.  For Winsome diamond, it is 0.06 (Based on (i) market price of around 32 (ii) 2011-12 sales - 5546 cr and (iii) MC - 340 cr). If this ratio has to approach 2, then on present sales of March 2012, Winsome price should reach around Rs. 1060 and much more based on 2013/14 sales.

(3) However, for the time being I shall target a price of only Rs. 95 (based on P/E method) for Winsome and reassess its target (i) after it achieves Rs. 95 and (ii) based on market conditions for diamond jewellery sector at that time.

(4) Just to mention, FIIs hold around 55 % stake in Winsome diamond.

Winsome Diamond and Jewellery

In pursuit of treasure, here is another idea (again from the world of equities), which in my opinion, might prove to be a multibagger. It is Winsome Diamond and Jewellery, presently quoting around Rs. 32. It shall be discussed/analyzed in my future posts.

Gitanjali vs. Tiffany & Co. (USA)

Tiffany & Co. (USA) is one of the biggest players in diamond Jewelry worldwide.  Its jewelry products include fine and solitaire jewelry; diamond engagement rings and wedding bands for brides and grooms; and non-gemstone, sterling silver, gold, and platinum jewelry. The stock rose around 50 times (from 1.6 dollar to 80 dollars) in the period from 1987 to 2011. Presently, it is quoting around 61 USD and has market capitalization of 7.7 Billion dollars (Rs. 38500 crores) on sales of 3.6 Billion USD (Rs. 18000 crores). Thus, Enterprise Value/Revenue or market capitalization vs. sales (say MC/S) ratio for Tiffany & Co. (USA) is around 2.1. Whereas, that of Gitanjali is 0.52 (Based on (i) market price of around 446 as on 21.11.12; (ii) 2011-12 Standalone sales - 7745 cr and (iii) MC - 4072 cr). In my view, Gitanjali’s MC/S should also approach 2.1 (that of Tiffany & Co.). Whenever this happens, on present standalone sales of March 2012, Gitanjali should reach around Rs. 1800 and may be much more based on projected 2013 and 2014 sales (Sales growing at around 30 % for the last 2 years).

Gitanjali Gems

In pursuit for treasure, here is one of my picks from stocks and that is "Gitanjali Gems"  (Presently  Rs. 429). When Titan was Rs.33.4 on 06.03.2009, did anyone think that stock price shall zoom to Rs. 206 as on 11.11.2010 (All rates ex split & Ex bonus).  Answer shall be in “No”. And most of you shall not perceive that Gitanjali Gems may well touch Rs. 1800 by August 2013. In my view, journey towards that has already begun. Just hold on to Gitanjali and buy on dips.