Oct 19, 2016 12:42 PM IST | Source: CNBC-TV18

See profit booking in Endurance Technologies: Prakash Diwan

Prakash Diwan of Altamount Capital Management is of the view that oen may see profit booking in Endurance Technologies.

Prakash Diwan of Altamount Capital Management told CNBC-TV18, "The money that Endurance Technologies has raised is not going to the company in any case, primarily because they don't need that money. They hardly utilise their capacities which they already have. So, the good part of this business is that it is going to generate a lot of free cash because they really don't have to invest anything into capacities. At Rs 570 plus or whatever the listing is at my sense is you will see a significant amount of profit booking and I would expect the stock to react a bit."

He further added, "There are a lot of people who were waiting for this kind of a stellar listing and specially the funded application would find a way out and then I would definitely buy it because it is not at all expensive. It is one of the best places in this space. And we have seen the casting space we talked about it even yesterday some time that this space is going to rev up quite a bit going forward also."

"Where it has grown is it is more of a net worth that has grown. If you see the return ratio, this is a story of return ratios not growth rate. The reason as I said 50 percent of its business comes from Bajaj Auto which itself hasn't been growing. The second big client is the Italian major Fiat and that too only from that particular plant of theirs So, that has also not grown significantly."

"The third biggest client in the making is Honda, which is also not a scorcher right now. So, all their top three clients are people who have businesses which have
been moderate. So, they don't have Maruti Suzuki, they don't have Eicher Motors or Royal Enfield. Then things would have been different. I fully agree the
growth rate hasn't been - let us face it - this is an Actis exit primarily. That is why they have offered such a small component of the equity."

"Post the issue the non-promoter holding is going to be 17.5 percent. So, you still have that 7.5 which is going to come very soon in the next three years. Technically it is in the next three years but it could come much sooner given the kind of robustness," he said.
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