One can keep a target price of Rs 75 on Alembic for the next six months. The stock can be held on for about 12-15 months and expect it to breach the three digit mark, he said.
He expects Techno Electric to move to Rs 225 in next six months and test a price of Rs 275 to Rs 300 in next 12-18 months.
Below is the edited transcript of Tulsian’s interview with CNBC-TV18.
On Alembic Pharma
A: This is a good company. One should consider their performance in Q1 results. We have not seen much improvement in the topline, but their pipeline looks strong since they have about 45 ANDA filings of which 20 approvals have come and the rest are awaited.
If one goes by the present size of the company, they have posted a topline of about Rs 370 crore for Q1 on which they earned a profit after tax (PAT) of about Rs 32 crore. That has given them an EPS of about Rs 1.70 on a face value of Rs 2.
Going forward, in FY13 they may show a growth of about 10-12% on the topline and about 15% in the bottomline, which may take its EPS to about Rs 750. I am quite bullish on FY14 because by then they should be able to take their topline to about Rs 2,000 crore with EPS of about Rs 10.
Their promoter stake is also quite assuring at about 74%. The company is situated at Varodara. For the one month or so it has been in limelight and informed buying is coming into the stock.
Taking all this into account, the stock at the current price looks quite attractive with a price target of maybe Rs 75 in next six months. It can be held on for a longer period of about 12-15 months and it can breach three digit mark.
On Techno Electric
A: Techno Electric is into EPC business and mainly for the power sector. In the last couple of years, the company has moved into wind power generation. They now have a total generation capacity of more than 200 megawatt. Their equity base is less than Rs 12 crore, to be precise it is Rs 11.5 crore. Their networth is about Rs 750 crore and the major portion of their networth has been diverted for power generation capacity.
This is the reason, inspite of having power generation capacity of more than 200 megwatts they don’t have much debt on their books. Their debt is anywhere between Rs 350-400 crore.
A significant portion of power generation commissioned in Q1 and that gets indicated from Q1 numbers also. Their Q1 topline is about Rs 195 crore with EBITDA at about Rs 82 crore. The EBITDA margin is 41%, PAT is close to Rs 42 and EPS is about Rs 7.20.
In the long term of next three-four years, they are expecting generation capacity to move to 600-700 megawatt and they have plans of making huge investments in T&D business since they have expertise in the power sector segment.
But going forward, even if I take FY13 expected EPS of more than Rs 30 and the kind of shift they have taken into power generation, this company gets placed as an EPC and power generation player. It is very easy for investors to take a call whether to place it in power generation space or EPC contract play.
For both the segments even if you take a P/E multiple of close to about Rs 8-9, which is getting applied to a profit making company considering their track record of declaring 150% dividend, the stock has good potential. It can move to Rs 225 in next six months and can see a price of Rs 275 to Rs 300 in next 12-18 months or so.