Aarvee Denim and Exports can test Rs 90 in next 6 months, says SP Tulsian, sptulsian.com.
Tulsian told CNBC-TV18, "Aarvee Denim and Exports is an integrated company based in Ahmedabad, Gujarat, having three plants and it is a vertically integrated textile maker with 78 million meters of denim. They are making 43,000 tones per annum of yarn. Apart from that they are making 3.5 million pieces of apparels and about 18 million meters of non denim fabrics, which are used for bottom wear fabrics."
He further added, "If you see the performance what I liked about the company is that if you go by their financial performance for FY12 the company had an EPS of Rs 6. But on the first half performance, the company has already clocked an EPS of Rs 13 and in fact that Rs 13 is equally broken in both the quarters. Close to about Rs 7 in Q2 and Rs 6 in Q1, that may be because of cotton prices remaining quite low."
"If you go by the financial performance also that is obviously because of the increase in the margin with top line of close to about Rs 400 crore. So even if I take the expected performance of the company for whole of FY13, I think they should be able to post an EPS of close to about Rs 23-24 and share is now ruling at a PE of 3.5 times. Even the book value is quite robust and the debt of the company is not very high. Large of the amount of about Rs 400 crore is used for financing the working capital."
"So overall because of the better performance, which we have seen actually partly reflected in the financial performance of Arvind also. So Aarvee Denims is a very significant player in the denim segment. The stock looks quite good from here on and one can expect a price target of about Rs 90 in next 6 months or so."
Disclosure: I have no holdings in the above stock.