Buy PTL Enterprises for long term: SP Tulsian

Tulsian told CNBC-TV18, "PTL Enterprises old name use to be the Premier Tyre and this company was acquired by the Apollo Group by about 8-10 years back. They have a tyre making plant at Kochi on a land area of about 30-32 acres but that is not their main business, they are not into the tyre making. The entire plant has been leased to Apollo tyre on a rental of Rs 40 crore per year that is Rs 10 crore per quarter. If you see the standalone results every quarter gives an income of flat Rs 10 crore. So some times that causes anxiety that how can you have a same fixed income on every quarter, so that Rs 10 crore is realized by the company as a rental income or maybe as a lease rent on a quarterly basis from Apollo tyres."

He further added, "If you see the standalone performance on an equity close to Rs 14 crore since they get Rs 40 crore lease rent they do not have much of expenses maybe about Rs 5 crore, so they have a PAT of close to Rs 22-23 crore every year from this operations."

"They are having 300 bed hospitals at Gurgaon. There has been talk that the company is looking to sell that hospital because that was taken one off activity maybe about 6-7 years back when the group might have decided to move into the hospital business. But this 300 bed hospital I don’t think now it is really a focus area for the group. This hospital has turned around and now the losses posted by this hospital maybe last year FY11 was about Rs 2-2.5 crore, so that can give a very good valuations."

"The kind of potential acquirer we see in this space because of the competition to become number one between
Apollo hospitals and Fortis healthcare this is estimated that they got an offer of close to about Rs 600 crore on which the debt of the company for that hospital is about Rs 200 crore."

"This hospital property is having surplus land available where the capacity of the hospital can be expanded from 300 bed to 500 bed. The 32-33 acre land which they are holding at Kochi also they have plans of developing into a hospital maybe IT park. The earlier government which was Left front government was not very receptive to the idea of land development and all sort of things but with the change in the guard in state of Kerala this also can get materialized."

"The value of this property is estimated close to about Rs 400 crore, considering the land rate prevailing at Rs 15 to 18 crore per acre. Taking all this into consideration I think the share looks very interesting idea. Again the only caution or only advice is that somebody whoever wants to buy it must have a time horizon of at least one year where they can expect a growth of about 60 to 70% from the current price."