KCP has target of Rs 360: Rajen Shah

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KCP has target of Rs 360: Rajen Shah

KCP has target of Rs 360, says Rajen Shah of Angel Broking.

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ALSO READ See previous views by Rajen Shah See what other Experts & Brokerages are saying about KCP See messages about KCP KCP BSE | NSE 01/06/12 Are Mutual Funds betting on KCP?

KCP has target of Rs 360, says Rajen Shah of Angel Broking.

Shah told CNBC-TV18, "KCP has got zero downside and the upside could almost be about 100%. This is Chennai based company. It is into cement, engineering and sugar business via its subsidiary in Vietnam.  At this point of time when the Sensex is at 17,500 its very compellingly priced actually. Its quoting at just about 5 times the current year earnings, this year it should report about Rs 63 earnings and its quoting at about Rs 308-310, so just at about 5 times."

He further added, "It has more than doubling its cement capacity from almost 0.72 to about 2 million tonne and this was going to happen in the next six months; maybe around June it should start the commercial production. It is spending almost about Rs 60 crore for modernizing and expanding its engineering business where it makes capital goods for sugar, cement and power and various engineering industries and even the sugar business is being expanded. So I think this is a combo of cement, engineering, sugar and all promising sectors, which should do exceptionally well over the long term."

"For 2012 and not 2011 we are expecting almost about Rs 100 kind of earnings for this company, so it's at about three times 2012 earnings. What we need to keep in mind is that the last time we touched 21,000, KCP was at Rs 850 and today we are at 17,500 which is about 18% down from that level and KCP is at about Rs 310, so its almost down 60% form the high of Rs 850. So I think that has clearly underperformed and with Rs 100 kind of expected EPS for 2012 this stock has got only one way to go and that is significantly higher from the current levels. My target for the day is Rs 340 but investors need not play for the day's time and I think this is a stock which should double the money in two years."