Enter Honda SIEL on dips: Tulsian

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Enter Honda SIEL on dips: Tulsian

Enter Honda SIEL Power Products on dips, says SP Tulsian of 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 Honda Siel See messages about Honda Siel Honda Siel BSE | NSE 30/05/12 Are Mutual Funds betting on Honda Siel?

Enter Honda SIEL Power Products on dips, says SP Tulsian of sptulsian.com.

Tulsian told CNBC-TV18, "Honda SIEL is a bit of a contrarian call because their Q4 performance probably may not get you too enthused. If I take an overall call, however, the company has posted an EPS of close to about Rs 30 with a topline of close to Rs 420 crore. They make Genset engines. Last year, they moved their factory from Himachal Pradesh to Greater Noida. Now they operate two plants - one at Greater Noida and the other at Pondicherry."

He further added, "If you do a comparison on a YoY basis, you will find that there is a sharp jump of 100% in EPS because in FY10 their EPS was Rs 15 and in FY11 it was Rs 30. In FY10, they had taken a hit of Rs 20 crore on account of exceptional item in respect to shifting their factory from Himachal Pradesh to Greater Noida."

"Going forward, if you take the financials of the company, their networth of about Rs 220 crore of which Rs 120 crore is lying in the books as cash balance with the company. Honda holds a stake of about 67% in the company and they have quite aggressive business plans. Whenever we see the kind of dull results in any quarter posted by these multinational companies, you see a big dip coming into the share price."

"The share is now ruling close to about Rs 400 but if somebody can keep this stock on the radar then the share may correct to about Rs 375-380 or one can start buying in a staggered manner. This is a very safe and comfortable stock and one can expect a price of Rs 550 in the next six-eight months time because I expect them to post better results in the coming two quarters. That will give a good opportunity to enter into the stock at this price."