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May 17, 2011, 12.16 PM IST
National Steel & Agro Industries can move to Rs 35-40 in maybe next 6 to 8 months time, says Investment Advisor, SP Tulsian.
Tulsian told CNBC-TV18, "National Steel is a small company having market cap of less than Rs 100 crore; to be precise market cap of close to about Rs 82-83 crore. It is very good established company having Rs 3 lakh per tonne per annum of capacity of coal roll. They buy a hot roll coil and make the coal roll plus galvanize color coating sheets from the HR coil.”
He further added, “If you see their operations they have been consistently doing quite well. For FY10, they had an EPS close to about Rs 6.90 but if I go by their 9 months performance they have not yet come out with their Q4 results but for first 9 months of FY11 they have already cloaked in a turnover of Rs 1770 crore with PAT of close to about Rs 24 crore. But because of very low equity of about Rs 32 crore they have an EPS of Rs 7.10 for the first nine months and I am expecting them to post an EPS of close to about Rs 240-250 for fourth quarter, which will translate into an EPS of close to about Rs 9.50 to about Rs 10.”
“Going forward, I think all these companies have been doing quite well. We have seen the kind of valuations getting ramped up from for Uttam Galva when the LN Mittal Group has acquired a stake in this company. And even if go by the financials fundamentals of the company, the book value per share is about Rs 53 which translates into price to book of less than half and as I said that taking EPS of Rs 9.50 for FY11 and maybe in double-digit for FY12, the share is ruling at a PE multiple of close to about 2.5 times.”
“Taking all these into consideration, I think going forward the stock has ability to move to Rs 35-40 in maybe next 6 to 8 months time with very limited downside from here on."
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