Bhagyanagar India has target of Rs 65: Harihar

1529 Investors following Bhagyanagar Ind. Share this News with them.

0

Like this story, share it with millions of investors on M3

Bhagyanagar India has target of Rs 65: Harihar

TS Harihar of Karvy Stock Broking is of the view that Bhagyanagar India has target of Rs 65.

Post your opinion here

 

0

Tweet

Share on Tumblr

Excerpts from Closing Bell on CNBC-TV18 Watch the full show » ALSO READ See what other Experts & Brokerages are saying about Bhagyanagar Ind See messages about Bhagyanagar Ind Bhagyanagar Ind BSE | NSE 31/05/12 Are Mutual Funds betting on Bhagyanagar Ind?

TS Harihar of Karvy Stock Broking is of the view that Bhagyanagar India has target of Rs 65.

Harihar told CNBC-TV18, "We have a recommendation on Bhagyanagar India. Its current market price is Rs 43 and we have a 50% upside target of Rs 65. Coming into the background it is a Hyderabad based company and part of the Surana group and is presently into manufacturing telecom cables, copper and allied products and it also has a real estate management division. The upside potential is likely to be largely driven by the real estate segment of the business."

He further added, "Lets look at the business composition. Currently copper products contribute about 56% to the revenues and real estate just 7% but this real estate business is likely to contribute around 35% over the next two years."

"This company has a land bank of around 3 million square feet in the outskirts of Hyderabad and the present value of this land bank is estimated at Rs 616 crore. We expect an EPS of 9.08 for FY08 and an EPS of 12.6 for FY09, which actually means that the stock is trading at 4.4 times 08 and 3.5 times 09. How we have valued the stock is that the land bank value of Rs 616 crore actually translates into Rs 69 per share value on a fully diluted basis."

"To be conservative we have actually discounted this value by 20% for a worst-case scenario in the case of a fall in the prices in the outskirts of Hyderabad that gives us a resultant value of Rs 55 per share. To this we have added Rs 10 which is estimated as the value of its copper and its cables business put together, that gives an enterprise value of Rs 65 and we have a 50% upside potential on the stock with a 6 months time frame."