Invest Indo Tech Transformers, says SP Tulsian

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Invest Indo Tech Transformers, says SP Tulsian

Invest Indo Tech Transformers, 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 Indo Tech Trans See messages about Indo Tech Trans

Invest Indo Tech Transformers , says SP Tulsian, sptulsian.com.

Tulsian told CNBC-TV18, "Indo Tech Transformers is owned by GE and they hold 75% stake. This company was acquired by them in June 2009. This acquisition was quite expensive made at about Rs 500 plus share. At that point of time the company used to post an EPS of about Rs 40-50. It is a transformer making company having four plants in South India (Tamil Nadu and Karnataka)."

He further added, "Post acquisition of GE, the company has not been able to perform. It had been posting dismal financial results. That was largely due to business structuring by the old management, huge modifications and amendments have been carried out. Inventories have all been written off and that is the reason for such a pathetic performance."

"The company makes power and distribution transformers, it is learnt that the company is back on track with production schedule, it is likely to maintain and the company is expected to perform better."

"GE Group with a marketcap of close to about Rs 125-130 crore is debt free. When it was acquired by GE, at that point of time also it was debt free even now the same status continues with book value of Rs 120. The company has multinational status and is engaged in the business of transformer making which seems to have very good potential."

"This is good stock to enter because problems of last couple of years have been overcomed by new management. Things should be able to move faster and a dramatic turnaround can come. We have seen these kinds of turnaround in the past in companies like Siemens and SKF Bearings. At Rs 125 the stock looks an ideal investment. One should have a time horizon of six to 12 months where a price of about Rs 175 to Rs 200 can be expected for the stock."