Munjal Showa has target of Rs 100: SP Tulsian

Tulsian told CNBC-TV18, “Munjal Showa is a joint venture company between Showa Corporation of Japan who is holding 26% stake and the Munjals of the Hero Moto family though the family has now bifurcated the companies between the chains of the family, they are holding about 34-35% stake in the company aggregate 60% stake held by the promoters.”

He further added, “If you see the Q4 working having posted by the company, they have posted a very good, very robust number with EPS of close to about Rs 6 while the whole of FY12 EPS has been at Rs 16.80 on a topline of close to about Rs 1,550 crore. The company is making shock absorbers and they are supplying that two-wheeler and four-wheeler and the prominent customers of the company are Maruti, Honda City, Hero Moto and other automobile manufacturers in two-wheelers and four-wheelers.”

“If you take on a historic earnings, it is ruling at a P/E multiple of less than Rs 5 but if I take a forward earning call expecting that company should be able to post an EPS of Rs 20-21, it is ruling at a P/E multiple of Rs 4. The book value which is now at about Rs 64-65 as on March 31, 2012 is likely to see its book value moving to about maybe Rs 80-82 by March 31, 2013, available at a forward price to book earning of about 1 time. So taking all this into consideration, I think again the stock looks very attractive and in fact in last couple of months, we have been seeing all auto ancillary stocks getting rerated. Many of them have appreciated by 25-30% but this stock has not come or has not been analysed by the market to a great extent. So again a price target of about Rs 100 in six months or so.”

Disclosure: No holding or interests in above stocks.