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Oct 16, 2012, 10.27 AM IST
KCP can move to Rs 60 in next six months, says SP Tulsian, sptulsian.com. They have two cement plants in Andhra Pradesh with an aggregate capacity of close to about two million tonne per annum. Apart from that, they have power business.
KCP can move to Rs 60 in next six months, says SP Tulsian, sptulsian.com.
Tulsian told CNBC-TV18, "KCP is into multiple businesses. The main business is of cement. They have two cement plants in Andhra Pradesh with an aggregate capacity of close to about two million tonne per annum. Apart from that, they have power business. They are into all three verticals, wind turbine, wind thermal and solar. They also have presence in engineering and biotech. But cement continues to remain their main focus."
He further added, "If you go by their financial performance for FY12, the company posted an earning per share (EPS) of close to about Rs 8, on a consolidated basis, on a topline of over 1,000 crore. But, for FY13, considering their first quarter results, I am expecting topline to be close to about Rs 1,200 crore with profit after tax (PAT) of close to about Rs 180 crore. That will give an EPS of close to about Rs 14 on the equity base of about 13 crore."
"If you see the present price, which is now at about Rs 42-43, the share is ruling at a PE multiple of three times. If I go by their net worth, marketcap, total enterprise value including the debt Rs 200 crore, the cement division is valued at an enterprise value of less than USD 40 per metric tonne. If you take the gross value, it works out at about USD 48 to USD 50 per tonne, which includes all three other businesses also. So, if you knock-off those three business valuations, it rules at about USD 40 per tonne. That seems to be quite low. I find this stock to be quite undervalued."
"Apart from that, the board has already paid first interim dividend of 25 percent, consideration of second interim dividend is placed on the agenda of the board meeting on October 25. So, I am expecting that probably the dividend payout also for the whole of the year could be in excess of more than 100 percent, though the share has a face value of Re 1. So, taking all this into account I think the stock looks quite undervalued at the current price and can move to about Rs 60 in next six months or so."
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