Accumulate SML Isuzu, says Ashish Tater

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Accumulate SML Isuzu, says Ashish Tater

Accumulate SML Isuzu with a long term perspective, says Ashish Tater of Fort Share Broking.

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Excerpts from Bazaar on CNBC-TV18 Watch the full show » ALSO READ See previous views by Ashish Tater See what other Experts & Brokerages are saying about SML Isuzu See messages about SML Isuzu SML Isuzu BSE | NSE 29/05/12 Are Mutual Funds betting on SML Isuzu?

Accumulate SML Isuzu with a long term perspective, says Ashish Tater of Fort Share Broking.

Tater told CNBC-TV18, "Swaraj Mazda has renamed its entity as SML Isuzu. This is one stock that we like because of two things; one, the parentage and strong exposure of parentage into the areas where India definitely need some building up. SML Isuzu is having rounds that Actis wants to exit and Isuzu wants to buy that particular stake. This story has been doing round about right from Rs 310 when the promoters had a rumour that Rs 400 would be offered to Actis for exiting it 5% holding."

He further added, "SML Isuzu is having a parentage from Sumitomo Corporation, which is almost 1.5 trillion Japanese Yen Company. If I look into the space where the parent is right now, I think India definitely requires this kind of companies for maintaining 8-8.5% GDP growth, apart from this if I look into the standalone numbers for Swaraj Mazda because this is not a parent company or a holding company, I see that the company would clock close to Rs 20 of EPS for this fiscal itself and companies from Japan normally trade in the range of 20-25 times forward, so that gives me a target of Rs 500 but there is one small catch that this stock has not fallen every time the market getting beaten down. This shows that the stock has been actually accumulated by strong hands and we have a longer-term target on to a stock of close to Rs 1,000."

"Right now if I see into the financials there is nothing to suggest that it can easily go to Rs 1,000 level but if I see the company's potential in terms of aerospace, railways, I think with that 5-6% exit from Actis the company would bring in more from the parent and would like to use the expertise of the parent and that would be shaping out for the company in the years to come and we have an estimate of close to Rs 32 of EPS for next fiscal and going by the same multiple rule that means 20-22 times forward multiple makes me a comfortable zone of Rs 650-700 from 1.5-2 years perspective."

"On a longer-term this stock should be accumulated on everyday, 5-7% one should be adding 100 shares if someone wants to buy 1,000 shares for the stock because on the longer-term this is one stock, which I feel would definitely hog limelight as a delisting candidate or the stock would gives a multi bagger potential because of the strong parentage from Sumitomo Corp and is into a space which India definitely requires in future."