Do not buy Binani Cement: SP Tulsian

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Do not buy Binani Cement: SP Tulsian

Do not buy Binani Cement, says SP Tulsian, sptulsian.com.

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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 Binani Cement See messages about Binani Cement Binani Cement BSE | NSE 01/06/12 Are Mutual Funds betting on Binani Cement?

Do not buy Binani Cement , says SP Tulsian , sptulsian.com.

Tulsian told CNBC-TV18, "I am not expecting the price discovery of more than Rs 110-120 for Binani Cement. I think now it is ruling at Rs 102-103 so there is no point in buying Binani Cement or even remaining invested in that. But of you come on in case of Binani Industries, which is ruling now at around Rs 155, in fact couple of days back it has been ruling at Rs 120-125. If you see they can make a profit of Rs 4000 crore and if you have a equity of Rs 30 crore that is 3 crore shares, the value per share translates into Rs 1300 per share. But here I have two caution that I am expecting that probably promoters of Binani Industries may go for the preferential allotment, may increase the equity base by 100% from Rs 30 crore to Rs 60 crore to enable them to have a mobilization of about Rs 500 crore-Rs 600 crore. Even if that happens, the value per share comes to about Rs 600."

He further added, "There maybe a little reduction in the consideration estimates, which I have taken at USD 175. So even if you take that into consideration, I think the share price of Rs 400 to Rs 500 looks quite feasible. Because I am going on this premise that promoters will be going ahead with the sale of cement division because looking to the track record of the promoters, they are so conservative, this Binani Family, they would not have put in this Rs 1000 crore merely to get the company delisted. Unless and until they have the backup plan of selling this cement division. So if you take all these 2 probabilities into consideration of raising equity base of Binani Industries from Rs 30 crore to Rs 60 crore and maybe some reduction in the sale consideration still you have a value of close to about Rs 450 to Rs 500 pre share of Binani Industries in next 6 to 8 months time."