No downside risk in Sunflag Iron: Tulsian

Investment Advisor SP Tulsian is of the view that with a 50% of appreciation scope from here on Sunflag Iron with virtually no downside risk from here.

Tulsian told CNBC-TV18, "The result has been very good for IGL and if you really see on QoQ, the company has been posting increase in the bottom line by 5% on a yearly basis the bottom line is increased by 25%. This is mainly with an increase of about 100 bps in the EBDITA margin in every quarter. They have a very strong presence in the CNG and the PNC and the same kind of growth is possible for the company to show maybe in a couple of years or maybe in the 2-3 years. Rs 12.5 of EPS now and maybe Rs 15 or Rs 16 last year with Rs 20 there after, and to have this kind of a growth and the share available at a PE multiple of 10 which is right now the present trend of the market and definitely one could expect a growth of about 20% to 25% from here on."

 He further added, "Sunflag has shown the Rs 21 crore profits, which was in fact the profit posted by the company in the preceding 9 months. The main advantage has been the No-Tax liability in this quarter, which was about 35% for the previous 9 months ended December 2007. But they again have been able to maintain the raw material prices to the extent of 56% of their topline that means there has been no pressure on the company in respect to passing the increased cost of raw material to their buyers. They are mainly into the rolled products in steel, alloy steel and all sorts of things. So in the time to come, they will be able to post an EPS of Rs 5 to Rs 6 and the share now is ruling at about 18 and definitely having a very low PE multiple of 3. So even you can have a 50% of appreciation scope from here on for the stock with virtually no downside risk from here."