Expect Rs 175 level in India Glycol: SP Tulsian

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Expect Rs 175 level in India Glycol: SP Tulsian

Expect Rs 175 level in India Glycol in about six months, 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 India Glycols See messages about India Glycols

Expect Rs 175 level in India Glycol in about six months, says SP Tulsian, sptulsian.com.

Tulsian told CNBC-TV18, "India Glycol is the largest bio mono ethyl glycol, MEG maker in the world. Their raw material is molasses, which is a by product of the sugar mill. Because of the bumper crop seen for this sugar season, this company will have a very good time going ahead because raw material availability will be quite easy.  It also makes diethyl glycol, triethyl glycol, ethylene oxide derivates and potable ethylene oxide."

He further added, "For the first nine months, it has posted a topline of Rs 1,800 crore, which has surpassed whole nine months topline of Rs 1,650 crore. PAT almost tripled in this period. Against Rs 27 crore PAT for whole of FY11, the company has posted PAT of about Rs 78 crore for these nine months. This Rs 78 crore has been evenly distributed in all three quarters. The EPS of Rs 27 for the nine months is spread equally over these three quarters, about Rs 8.80 to Rs 9 per quarter."

"Cash profit is very significant. That has almost doubled from Rs 100 crore in FY11 to about Rs 200 crore. They have also informed that the forex losses of Rs 48 crore provided by the company is likely to get reversed in fourth quarter, which will translate into an earning per share of about Rs 17. So on a PE and valuations basis, it is ruling at a PE multiple of about 4 on historic earning and on a cash EPS of 1.5."

"FY13 is likely to be very good. The price of MEG has been quite bullish because of rising crude prices and that an advantage. It has a net worth of about Rs 500 crore, which translates into book value per share of about Rs 185-190 - that is historic book value because the equity base is very low. Considering all this, this is a very good stock. If one can keep a view of about six months, then a price of Rs 175 can be expected."