Limited downside in Surya Roshni: Tater

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Limited downside in Surya Roshni: Tater

Limited downside in Surya Roshni, says Aashish Tater, Head of Research, Fort Share Broking.

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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 Surya Roshni See messages about Surya Roshni

Limited downside in Surya Roshni , says Aashish Tater, Head of Research, Fort Share Broking.

Tater told CNBC-TV18, "Surya Roshni is our pick because of its one ratio that is marketcap to sales ratio similar recommendation that we recommended was Atlas Cycles and it gave almost 80-100% return in no time. Taking a call on Surya Roshni, I don't think it will have the same fortune as of Atlas Cycle but the downside I think from here on is definitely locked."

He further added, "Taking a technical call on this stock, this stock is into disastrous selling mode breaching all its support levels but the promoters of the company have converted its warrants even at Rs 111 levels, which triggered and open offer at Rs 111 where only 6% of the 20% got subscribed that means people were not willing to sell even at Rs 111, why this is so? - If you take the real estate story they have land bank in Bahadur Gargh which the management pointed out some time back that they would like to monetize it but not story after that happened and the promoters had gone ahead and converted their warrants into equity, so there might be a catch that this particular land bank can fetch them much more than their conversion price."

"Secondly taking a call in terms of current valuation the company on the conservative side is expected to do sales of Rs 3300 crore, marketcap of Rs 277 crore. Looking into their margins let us say they do their 2% margin and there is no sign of improvement going forward, they will still do somewhere around Rs 65-70 crore in terms of consolidated PAT. That would mean a PE of less than 5.5 times going forward."

"The third catch that I would like to see into this particular stock that interests me the most is what happens once this particular land bank story actually gets materialized taking a quant call from this stock, the stock has always been a performer near Diwali time where it actually peaks out for the year. So if someone is wanting to invest say 500 shares into the stock he can easily bookout 200-250 shares somewhere near Diwali where I expect a price of close to Rs 85 levels and forget the rest from a longer-term perspective because this stock will definitely hog limelight and is a good stock in terms of dividend history, they haven't missed a single dividend for the last 21 years. So looking into all this perspective, I think the downside risk is around the Rs 57-58 levels where the technical's are pointing to and is going to get bottomed out very soon."

Disclosure: We have recommended the stock to our clients and firm might also have positions. No personal holding in the stock.