Buy Bharat Bijlee, says SP Tulsian

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Buy Bharat Bijlee, says SP Tulsian

Buy Bharat Bijlee, says Investment Advisor, SP Tulsian.

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Excerpts from Bazaar on CNBC-TV18 Watch the full show » ALSO READ See previous views by SP Tulsian See what other Experts & Brokerages are saying about Bharat Bijlee See messages about Bharat Bijlee

Buy Bharat Bijlee , says Investment Advisor, SP Tulsian.

Tulsian told CNBC-TV18, "Bharat Bijlee is making transformers, motors, and drives and also undertaking the project management. In fact maybe FY09-FY10 of the company was not that great because of the lower order supply, lower execution at the company's end of the transformers. But if you see the FY11 performance, the company has posted the record PAT in its history and the EPS has been close to about Rs 135 for FY11 on a topline of close to Rs 700 crore."

He further added, "Going by the present order book positions and the kind of performance, the company has posted for Q1 of FY12 thought the topline is constant because always the revenues of the company is back ended, which largely comes into Q4 but if you see the Q1 performance the company has posted topline of close to Rs 120 crore but PAT has really improved which has resulted into EPS of close to Rs 48 as against Rs 130-135 for FY11. There has been substantial improvement, substantial growth in the PAT margin and I think that is likely to continue that can see the company posting and EPS of close to Rs 160 for FY12."

"If you see the financial structuring or financial health of the company its debt free on a market cap of close to Rs 390 crore. The company has investment in two companies that is Siemens and HDFC and the market value of both the stocks as of today are about Rs 240 crore. In the past company has contemplated selling those shares. Since the company is cash rich they are not in need of any money and they have kept their investments in both these companies in tact and there is no any kind of binding on the promoters' that they cannot exit from this stock because this is purely a financial investment by the company."

"So overall if I take a valuation call, if I knock of the value of the investment, the market cap is close to about Rs 150 crore but even if I go on the earning potential the share is ruling at a PE multiple of 4. The present book value is at about close to Rs 585-590 which will rise to abut Rs 680 by end of March 31, 2012 which will result in price to book of one. In fact the transformer industries are doing quite well; the order flows the expected growth in the industry in the next couple of years makes it a good buy at these levels."