Piramal Health has target of Rs 600: Rajen Shah

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Piramal Health has target of Rs 600: Rajen Shah

Piramal Healthcare has target of Rs 600 in the next 12-18 months, says Rajen Shah, CIO, Angel Broking.

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Excerpts from Bazaar on CNBC-TV18 Watch the full show » ALSO READ See previous views by Rajen Shah See what other Experts & Brokerages are saying about Piramal Health See messages about Piramal Health

Piramal Healthcare has target of Rs 600 in the next 12-18 months, says Rajen Shah, CIO, Angel Broking.

Shah told CNBC-TV18, "We at Angel had always fancied companies which have done buybacks and more so when the buyback is a mega one. We all know that Piramal last year bought back almost about 4.1 or so crore shares at about Rs 600 and that was a buyback of almost about Rs 2,500 crore, so that was a mega buyback. When a promoter is pumping in such kind of money to buyback its own share and that too at a significant premium to the market, I think that gives us immense confidence. So that is one of the reasons why we like Piramal."

He further added, "Secondly, the interesting thing which has recently happened is this stake pick in Vodafone. About seven months back they picked up 5.5% stake at about Rs 2,700 crore or Rs 2,800 crore and now they have picked up another 5.5% at about Rs 3,100 crore. So net-net currently they own about 11% stakes in Vodafone and the total investment is about Rs 5,800 crore roughly."

"If you see Bharti they have got about 24 crore subscribers across 19 countries and if you take out the African business out of it and the digital TV subscribers and all that we just worked out, if you compare like to like, Bharti with Vodafone the Indian business of Bharti would be somewhere around about Rs 1 lakh crore and Vodafone has got about 10% less subscribers than Bharti, so we do believe that Vodafone would be valued somewhere around about Rs 90,000 crore when it lists actually 18 months from now. Rs 90,000 crore means Piramal's 11% stake would be roughly around about Rs 9,500 crore or so."

"I think that this Rs 5,800 crore would be around Rs 9,000 crore in the next 18 months or so that is about almost 30-40% kind of upside. Post-tax the company will make about Rs 2,000 crore in 24 month, that's Rs 1,000 crore annually. So that will be significant and considering that the market cap of the company is just about Rs 7,300 crore."

"The company is into pharma business is getting very aggressive into the real estate business via Indiareit actually and the Piramal Healthcare finance business is likely to boost up earnings in the coming years. So I think on all parameters at about Rs 420 levels the stock certainly looks interesting. We have been accumulating the stock since levels of about Rs 340-350 and at every dip we are actually buyers into this company. We have a minimum target of Rs 600 in the next 12-18 months for this stock."

Disclosure: We own the above stock in our PMS.