Below is an edited transcript of Tulsian's interview on CNBC-TV18
On Panasonic Carbon
Panasonic Carbon India is making carbon cells for dry battery industry. The company has collaboration with Matsushita group of Japan. Looking at the shareholding pattern, out of 73 percent of the promoter holding, 63 percent is held by Panasonic Corporation of Japan and 10 percent by the Jivrajkas, the Indian promoter.
However, for first nine months the financial performance falls in the small-cap because the market cap is less than Rs 100. They have posted good numbers, in first nine months, with top-line of close to Rs 28 crore and profit after tax (PAT) of more than Rs 5. The earnings per share (EPS) for the nine months is Rs 11, which was quite low for FY12 at about Rs 8-8.5. The company has paid dividend of 70 percent last year for FY12, so one can expect a dividend of 80-85 percent for this year as well.
Considering the financial performance or the net worth, Rs 4.8 crore is the equity capital and Rs 60-61 crore is the net worth. Out of this, Rs 60-61 crore net worth, Rs 56-57 crore are in the cash and cash equivalent. You have a book value of Rs 127 per share which is represented by the cash and cash equivalent of Rs 120 per share. If I knock off this Rs 120 from the current market price of Rs 176, I get the share at a net price of about Rs 56, which translates into a price to earnings (P/E) multiple of Rs 4. Rs 11 is the EPS for nine months, so one can safely assume an EPS of about Rs 14.50-15. The share, on a net of cash basis, is ruling at Rs 56-57.
Also, the dry battery industries has been posting 2-3 percent growth and the company’s plant at Nellore at Andhra Pradesh has a very big capacity. Of the present sale, 75 percent is catered to the domestic market, 25 percent is catered to the export market. Even if the demand picks up or they take the market share from the other makers, they will be able to cater because of the ample production capacity at their end.
The pedigree debt-free status, cash and cash equivalent in the books, taking all this into account the share can move to Rs 225 in 12 months or so.
Muthoot Capital Services
This is a small NBFC. They operate in Kerela and are into the consumer loan finance, gold loan, personal loan. This company has been gradually ramping up their performance. In their nine months performance, the top-line is almost equal to what the company posted for FY12. The EPS for FY13 is likely to be close to Rs 16 because they have already posted an EPS of close to Rs 12 with the present book value at around Rs 84-85.
If you see the gradual improvement in the share price of this company, I may not take the book value call or the price to book ratio or maybe the PE multiple because that may not be relevant because this is a very small NBFC. But if you see the gradual increase in the share price - that indicates, maybe the business ramp will happen. 75 percent promoter stake out of 25 percent public float, 12-13 percent is held by the closely held group or those who are connected to the promoters. So, I find this company quite attractive. If somebody can keep a view of about 12 months can expect a price of Rs 160 or so.