Add Elgi Equipments in your portfolio, says SP Tulsian

Tulsian told CNBC-TV18, “Elgi Equipments has posted very good results for Q4 and they are the Asia’s largest air compressor makers, apart from those also making automotive service station equipments. Catering to practically all the sectors whether you talk of the core sector, the engineering sector and even the food and beverages, pharma and all sort of things.”

He further added, “If one sees the company’s financials, firstly I am impressed with the financials of the company. Very low equity of about Rs 15.5 crore, with a net worth of close to about Rs 400 crore, obviously the company is debt free and they have Rs 150 crore in the books of the company as cash which is lying for quite sometime. The amount of the cash accrual which they are making, they have posted a top-line of close to about Rs 1,000 crore with PAT of about Rs 75 and that translates into an EPS of close to about Rs 5, face value is Rs 1, so board has declared a dividend of 100%. Payout is definitely slightly low, because in spite of such a huge cash debt free status, not much cash requirement, the board could have gone for the higher dividend payout which is now at about maybe 20-22% including dividend distribution tax. But going forward considering the consistent growth having posted by the company, I am expecting that probably for FY13 because the kind of requirement their products enjoy, especially in the railway, oil and gas and power sectors, I think this company is going to do quite well. Maybe in FY13 one can expect an EPS of close to about Rs 6.5-7. So taking all this into account, I am expecting a price of about Rs 100 in next 12 months or so and look a very good and consistent stock to have in one’s portfolio.”

Disclosure: I have no holding or interest in the stocks discussed.