Ciba India has target of Rs 400: G Shah

Gaurang Shah of Geojit Financial Services is of the view that Ciba India has target of Rs 400.

Shah told CNBC-TV18, "The rationale behind choosing Ciba India also comes from some of those not so very liquid counters. But the rationale is that if you have one-year plus kind of time horizon then definitely returns will spill over a period of time. To judge a price target of Rs 400 the rationale is that it has got three major business verticals, which are plastic additives, coating effect chemicals and water and paper treatment chemicals. There has been significant demand in all the three verticals and with the amount of investment that is going into it by large corporate houses that are consumers of all these three verticals or segments is quite robust."

He further added, "The growth has been there at almost around 20-25% on a YoY basis. If you consider the kind of shortage of drinking water, especially the water treatment segment looks to be very encouraging and promising in the near future since there is tremendous shortage across the subcontinent of drinking water. The parent’s focus on the growing Indian market is going to grow over a period of time, which will translate into increasing outsourcing from Ciba India Ltd. So from that point of view we have a price target of around Rs 400. But again the timeframe has to be around one year to one and a half year plus. So with that rationale we have come out with a price target of about Rs 400. It is currently quoting at Rs 184. But I don’t think it will be difficult for it to achieve a target of Rs 400 in a year to a year and a half."