Limited downside in Ineos ABS, says Aashish Tater

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Limited downside in Ineos ABS, says Aashish Tater

Aashish Tater, Head of Research at Fort Share Broking feels that there is a limited downside in Ineos ABS.

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Excerpts from Bazaar on CNBC-TV18 Watch the full show » ALSO READ See previous views by Aashish Tater See what other Experts & Brokerages are saying about INEOS ABS See messages about INEOS ABS

Aashish Tater, Head of Research at Fort Share Broking feels that there is a limited downside in Ineos ABS .

Tater told CNBC-TV18, "Ineos ABS has been a pick right from 2010. Ineos ABS parent - Ineos ABS Jersey and BASF have actually gone to work on Styrolution which is an opportunity close to USD 6.5 billion globally and we expect that Ineos ABS being a baby of the parent would definitely get business from this."

He further added, "The company actually announced that delisting offer has just extended for Rs 605-606 and I think this is not the fair valuation for the stock. Take a call from annualized equivalent value that we have been playing for all the other stocks whether it's Alfa Laval, Elantas Beck and others. Their fair value roughly works out at close to Rs 800. We are talking to other fundamentalists - there have been disappointed with the current quarterly results. But what I felt that there was a higher provisioning of contingency, close to Rs 4 crore and almost Rs 8 crore of forex loss because of weakening rupee that actually resulted in subdued performance in terms of bottom line."

"We still feel and are confident that if I remove this and look at operational performance, the company would grow at 15-16% CAGR over next three years. This Styrolution business coming to them is going to be a very big opportunity from Ineos ABS parent side. So here is a stock which has got limited downside and still a potential upside because we  feel that we would not tender our position if we hold anything into it less than Rs 850 and I think that should be the value - Rs 800-850 - that should be easily paid by the parent. Even from rupee weakening side, I think it would cost them less at Rs 800 compared to what it would have costed them at Rs 750 almost a year back."