Hold Hyderabad Industries, says Mehraboon Irani, VP-PMS, Centrum Broking.

Irani told CNBC-TV18, "Hyderabad Industries is a company which not many of aware of. It is a KK Birla Group Company; it manufactures Fiber sheets, the asbestos sheets which is normally used by the rural segment. I think it has a small equity but if you look at the financials, they are fantastic, Rs 48 crore net profit was made last year and it works to an EPS of around Rs 60. In the first half of the current year for September the company made a net profit of Rs 47 crore and if I look back at the second half of the last year and put those figures over here then I am quite sure it will increase by at least 10-15%. So last year second half was Rs 17 crore and I think it should be a conservative Rs 25-26 crore and add that to the first half figures, so net profit of Rs 68 crore on a very small equity of around Rs 8 crore. So we have an EPS of around Rs 100.”

He further added, “Last year the company declared a dividend of 100% and so one can expect a much higher dividend payout ratio. So even if you count earnings of Rs 100 per share in the current year for 2009-10, the market normally discounts things in advance. So even if you assume a 20 or 15% increase next year, so for Rs 120 earnings next year you are getting the stock at 3.5-4 times PE which is dirt cheap. This is one stock which one can acquire, hold on to it irrespective of what happens to the overall market, it’s a safe bet.”

Disclosure: The above stock would be in my portfolio or in my clients’ portfolios.