SP Tulsian, sptulsian.com advises traders to sell Wockhardt around Rs 1850.
Tulsian told CNBC-TV18, “Wockhardt having recommended at Rs 300 obviously one feel that the stock has really run so much. Wockhardt results expectation I don’t think that there is any logic of seeing it on a year-on-year (YoY) basis. One has to see it on a quarter-on-quarter (QoQ) basis and you won’t see that kind of increase coming in on that account. But if I need to take a call probably for whole of FY13, I am expecting the earning per share (EPS) to be close to about Rs 155 or so, maybe Rs 2 plus or minus. And if you take in that context share is still ruling at a price-earning (PE) multiple of about 12.”
He further added, “Wockhardt is in the top 5 or 6 pharma companies and if you take the call based on the sales-to-market cap or maybe the earning multiple you definitely see it quite undervalued. I don’t think that the PE multiple of 12 on the historic earning because going ahead even for FY14, I don’t expect the EPS to grow in double digit. Maybe one can expect an EPS of about Rs 165 or so having said that for FY13 it is estimated to be at Rs 154-155. So even if I expect the PE, I can only attribute the PE expansion as the probability happening, which can make the stock price to move up.”
“I don’t think that much increase in the top-line and the bottom-line can be expected. So in that scenario it would be prudent that you keep a range of about maybe Rs 1,700-Rs 1,900, which earlier used to be between Rs 1,550-Rs 1,750 – that you sell the share if it moves to Rs 1,850, you will definitely be getting an opportunity to buy them back at Rs 100 lower. So that should be kept in mind. But yes, on a fundamental basis and on the results expectation you cannot take the YoY call on the expected results for Q3.”