Buy Honeywell Automation for long term, says Aashish Tater

3589 Investors following Honeywell Autom. Share this News with them.

0

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

Buy Honeywell Automation for long term, says Aashish Tater

Aashish Tater, Head of Research, Fort Share Broking advices investors to buy Honeywell Automation for long term.

Post your opinion here

 

0

Tweet

Share on Tumblr

Excerpts from Bazaar on CNBC-TV18 Watch the full show » ALSO READ See previous views by Aashish Tater See what other Experts & Brokerages are saying about Honeywell Autom See messages about Honeywell Autom

Aashish Tater, Head of Research, Fort Share Broking advices investors to buy Honeywell Automation for long term.

Tater told CNBC-TV18, "If you look from October-November 2010 to November 2011 rupee has been worsening to its low in fact it hit its life low recently, during the same period call and put options were allowed. What we found out that rupee is getting beaten down or getting pounding because of Rs 2.5 over speculation because the suppliers of the money are holding their dollar by buying protective puts, another Rs 1 is because of pure speculation basis. So on conservative side the rupee range would eventually come down Rs 3.5 to Rs 4 if just this call and put option business being stopped."

He further added, "Honeywell Automation is one stock that we feel has got unnecessary beating and is available at very attractive valuations. If you look at current market price of Rs 1,700 odd the company is trading roughly at 16-16.5 times current year earning because they have booked out their previous expenditures in the recent quarter and that's why their particular quarter has gone very bad. They reported close to 15-16 crore odd of net profit for this quarter but for the full year I am confident the company would come out 100 crore to 108 crore, which is year on year flat. If I take a call from parent perspective Honeywell Incorporates, Honeywell International is available and is buying companies at an annualised equivalent value of close to 14% and this particular company from annualised equivalent value with higher growth is available at 18.5-19%. The promoter owns 81% and the free float is roughly about Rs 300 crore. So if I take a call from delisting perspective which I think because of the way it is getting accumulative I super impose it on Atlas Copco's chart, first it had to go down and then once got accumulated it had a sharp rally.

"So if I see from this angle and if I have to tender this particular stock I would not be asking less than Rs 3,500 to Rs 4,000 onto the stock if I own this particular stock because its peanuts for the company if they given 600-700 crore to the free float holders of the stock and the delisting probability which was less than 48% has suddenly jumped to 53-54% based on our models and calculations. This shows a) higher accumulation on charts b) with stock touching Rs 2,200-2,300 I think the probability could even define to 60% and eventually the stock could get delisted. So from every angle the stock is available at mouth-watering levels, people should have patience to hold this stock, do no buy chunk, buy something but from very long-term perspective or otherwise the stock get delisted, do not tender less than Rs 3,500-3,700."

Disclosure: I have no personal holding in the stocks discussed but may have recommended them to clients.