Hind Rectifiers can test Rs 120-130: Rajen Shah

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Hind Rectifiers can test Rs 120-130: Rajen Shah

Hind Rectifiers can test Rs 120-130, says Rajen Shah, CIO, Angel Broking.

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Excerpts from Bazaar on CNBC-TV18 Watch the full show » ALSO READ See previous views by Rajen Shah See what other Experts & Brokerages are saying about Hind Rectifiers See messages about Hind Rectifiers

Hind Rectifiers can test Rs 120-130, says Rajen Shah, CIO, Angel Broking.

Shah told CNBC-TV18, "Hind Rectifiers is a very low profile, 50 year old Bombay-based company. It is into semiconductors, rectifiers, inverters and transformers. It is a small company. The turnover this year would be about Rs 130 crore. The interesting thing is that about 50% of its turnover comes from railways and 50% comes from infra and various industries. Infra has slowed down significantly, and that should have impacted the company's business. But in the first half the turnover has gone up by 30% and profits have gone up by about 70%, though on a small base. The company has four plants. One is in Bombay at Bhandup, one is at Nasik and two at Dehradun."

He further added, "The Dehradun plant has lot of tax benefits when production takes place there. Dehradun has started operations pretty well and the turnover is growing at about 50-60% over there. The Bombay plant is situated on 4.5 acres of land and Mahindra Lifespace has recently built-up a project just opposite to this factory. The price they are charging is Rs 10,000 a square feet. Excluding construction and other government expenses, Hind Rectifiers should be able to make about Rs 22 crore per acre from this project."

"They own about 4.5 acres, so the value of the land works out about Rs 90 crore, whereas the market cap itself is about Rs 75 crore.  Since Dehradun plant is operationally doing well, Mumbai operations maybe shifted to this in the next two years. I do expect this unlocking of land to happen in the next 24 months. We are expecting about Rs 150-160 crore of topline and an EPS of about Rs 10 next year. Even if we give Rs 12-13 kind of PE multiple, on fundamental itself it is about Rs 120-130 stock, plus the land value. The stock has all the potentials to be a multibagger in the next three years of so."

Disclosure: We own the above stock in our PMS.