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May 02, 2011, 11.20 AM IST
Expect 30-40% returns in Elgi Equipments, says Investment Advisor, SP Tulsian.
Tulsian told CNBC-TV18, "Elgi Equipments is a very interesting story. In fact if you see, there are two multinational companies - (1) Atlas Copco, (2) Ingersoll Rand and I have the positive call on both. We have seen Atlas Copco getting delisted and now even the talks of Ingersoll or maybe even the fundamentals of that company are quite good. If you take the domestic company, Elgi Equipments falls in that category. They make the rotary and reciprocating air compressor as well as making the compressor for Railway and other customized applications also. Similarly is the story here."
He further added, "For FY11 I am not going by the quarterly performance but if you see FY11 their top line grew by about 39% while bottom line grew by about 53%. So that has resulted into an EPS of close to about Rs 5.50. The company has face value of 1. This Rs 5.50 is on the enlarged equity because last year company issued 1:1 bonus. So if you take that on a pre-bonus equity that amounts close to about Rs 11 plus."
"The company declared a dividend of Rs 100%. They are sitting on a cash balance of close to about Rs 180 crore and very low equity inspite of the issue of bonus shares of 1:1 last year equity of the company is now less than 16%. But the interesting part that all the compressor makers are doing very good and in fact that gets reinforced by the quarterly results posted by all three - Atlas Copco, Ingersoll Rand as well as Elgi Equipments. So I won’t be surprised if the company is able to post an EPS of close to about Rs 750 for the FY12. And going by those standards and considering the PE multiple of more than 20 gets applied for Ingersoll Rand. Since Atlas Copco is history it already getting delisted. So I think this looks quite good and one can expect 30% to 40% kind of return from the current share price over next one year."
Jun 19 2013, 16:41
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Jun 19 2013, 12:44
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