KCP can touch 4-digit mark: Tulsian

Tulsian told CNBC-TV18, "KCP is an interesting company having dramatically turned around and has been showing excellent performance for the last two-three years. This company has a cement plant in Andhra Pradesh of five lakh tonne, which is already operating at more than 120% capacity. About six lakh tonne they are producing and plus they have the power generation capacity of about 12 mw, which is used for the captive consumption. Over and above they have two engineering plant, which is the growth driver for the company."

He further added, "If one see the present revenue breakup of about Rs 300 crore, 50-50 is coming from cement as well as engineering. But the growth plans, which they have going forward is about 60% growth in the coming year i.e. for FY09 from engineering division and expecting a topline of about Rs 250 crore."

"Based on H1 results, FY08 should be able to give an EPS of Rs 70, while FY09 should be able to give an EPS of Rs 100. The best part is that the company has two pieces of land; one at Chennai, which is to the extent of about 40 acre, which they are exploring the possibility or rather the advance steps have been initiated to convert that land into the container freight station, which will be a big revenue earner for them without having much of the capex. Plus 4 acre of plot, which they have in Hyderabad is intended to be develop into a five star hotel which will be leased out to any hotel chain for operation and maintenance."

"Their main focus has been engineering; cement has been giving them good profits and realization. The book value is quite robust, the dividend payout hovers about 100% FY07, which is likely to get enlarge to about 150%. As far as sugar concern, they have a subsidiary in Vietnam in fact in Vietnam the sugarcane prices are lower while the realization is higher. So that subsidiary alone can give them a profit of about Rs 12-15 crore, which would translate into an EPS of close to Rs 10."

"If I take overall call, Rs 70 EPS for FY08, Rs 100 EPS for FY09 the share is now ruling at Rs 600 or maybe Rs 620, which discounts forward earnings close to six times which in fact is low. If you take any engineering stocks they are ruling at a PE multiple of Rs 15-20. I may not be taking that kind of multiple but even if you take a multiple of 10-11, the share has the potential to cross four digits mark at least Rs 1,000 in the next nine months."

Disclosure: Analyst doesn't hold the above stock.