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Which Stocks can Become Future Multibaggers and Why.

1. Tejas Networks Ltd. ( Current Market Price: 193 Rs.)

Brief about the company:

Tejas Networks is an optical and data networking products company that designs, develops and manufactures high performance and future-ready products for building high-speed communication networks that carry voice, data and video traffic from fixed-line, mobile and broadband networks.

Why TEJAS?

  1. Sales Turnover ( Compounded Sales Growth of 3 Years: 25%) :

2. Net Profit: (Compounded Profit Growth (TTM: 39%)

3. ROCE: 12 % | ROE: 12 % | Interest Coverage Ratio: 10 | NPM last year: 17 ( Industry NPM: -5%) | Pledged percentage: 0.00 %

4. Free Cashflow:

  • Free cash flow last year: 171.40 Cr.

  • Free cash flow 3years: 351.35 Cr.

  • Free cash flow 5years: 359.46 Cr.

5 .Tejas Networks is also India’s Leading Telecommunication Product Company.

6. Tejas Networks has zero debt.

7. Scope of Telecom Industry in India:

India is currently the world’s second-largest telecommunications market with a subscriber base of 1.20 billion and has registered strong growth in the past decade and half. The Indian mobile economy is growing rapidly and will contribute substantially to India’s Gross Domestic Product (GDP)

. Six-fold increase in Government spending on telecommunications infrastructure and services in the country — from Rs 9,900 crores (US$ 1.41 billion) during 2009–14 to Rs 60,000 crores (US$ 8.55 billion) (actual + planned) during 2014–19.

. Over 75 per cent increase in internet coverage — from 251 million users to 446 million.

. Country-wide Optical Fibre Cable (OFC) coverage doubled — from 700,000 km to 1.4 million km.

. Five-fold jump in FDI inflows in the Telecom Sector — from US$ 1.3 Billion in 2015–16 to US$ 6.1 billion in 2017–18 (up to December 2017)

8. Technical Analysis:

16 out of 28 major Technical Analysis Indicators are showing Tejas as ‘Bullish on charts’.

9. Held in 5 Schemes (11.88%), 74 FIIs (25.06%). Highest public shareholders is Cascade Capital Management Mauritius (18%).

Note: Recently Tejas Networks’ TJ1400 Selected as a Finalist for Leading Lights Award.

2. Caplin Point Laboratories Ltd. ( Current Market Price: 330.95Rs.)

Brief about the company:

Caplin Point Laboratories Limited is a pharmaceutical company. The Company’s product segments include Antibiotics, Non-steroidal anti-inflammatory drugs (NSAIDS), Ophthalmics, Pain Management and Anti-ulcers. Its research and development units are located in Gummidipoondi Taluk, Tamil Nadu.

Why CAPLIN?

  1. Sales Turnover ( Compounded Sales Growth of 3 Years: 29%) :

2. Net Profit: (Compounded Profit Growth in last 3 Years : 51%)

3. Caplin has the strongest fundamentals among it’s all peers.

ROCE: 64 % | ROE: 49 % | Interest Coverage Ratio: 4,233 | NPM last year: 27 ( Industry NPM: 9%) | Pledged percentage: 0.00 % | Debt: 0.45 Cr. | Quick ratio: 2.56 | Current ratio: 2.78

4. Free Cashflow:

. Free cash flow last year: 17.96 Cr.

. Free cash flow 3years: 94.89 Cr.

. Free cash flow 5years: 132.61 Cr.

5 . Company is virtually debt free.

6. Scope of Indian Pharmaceutical Industry

India is the largest provider of generic drugs globally. Indian pharmaceutical sector industry supplies over 50 per cent of global demand for various vaccines, 40 per cent of generic demand in the US and 25 per cent of all medicine in UK.

. The pharmaceutical sector was valued at US$ 33 billion in 2017. The country’s pharmaceutical industry is expected to expand at a CAGR of 22.4 per cent over 2015–20 to reach US$ 55 billion.

. India’s pharmaceutical exports stood at US$ 17.27 billion in FY18 and have reached US$ 15.52 billion in FY19 (up to January 2019).

. In February 2019, the Indian pharmaceutical market grew by 10 per cent year-on-year.

. The exports of Indian pharmaceutical industry to the US will get a boost, as branded drugs worth US$ 55 billion will become off-patent during 2017–2019.

. Medicine spending in India is projected to grow 9–12 per cent over the next five years, leading India to become one of the top 10 countries in terms of medicine spending.

8. Technical Analysis:

17 out of 28 major Technical Analysis Indicators are showing Caplin as ‘Bearish on Charts’.

9.Held by 36 FIIs (7.32%), P VIJAYALAKSHMI (23.64%) and MATTHEWS INDIA FUND (5.12%).

Note: Both the stocks are even good for the long term.

Suggestion: You need to have a Zero Brokerage demat account with you to trade/invest in stocks. I use Upstox because of its interface.

Thank you!

Akshay Seth invest@equityboxx.com Linkedin: www.linkedin.com/in/akshay-seth-1b7a1668

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