Sandesh has target of Rs 350: Tater

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Sandesh has target of Rs 350: Tater

Sandesh has target of Rs 350 with 6-8 months perspective, says Ashish 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 Ashish Tater See what other Experts & Brokerages are saying about Sandesh See messages about Sandesh Sandesh BSE | NSE 30/05/12 Are Mutual Funds betting on Sandesh?

Sandesh has target of Rs 350 with 6-8 months perspective, says Ashish Tater, Head of Research, Fort Share Broking.

Tater told CNBC-TV18, "Sandesh Limited is Gujarat based samachar patrika, which I feel does not deserve a valuation even at current levels. If I closely look into the balance sheet of the company, the company has got a cash and cash equivalent of close to Rs 200 crore on a market cap of close to Rs 225 crore with just Rs 20 crore odd debt into the balance sheet. This Rs 200 crore of cash and cash equivalent is justified from the sense that Rs 85 crore has been given to Sandesh Procon Private Limited, which is promoted by the promoters of Sandesh Limited, which are into real estate business."

He further added, "If is see the financials of the company, the company will clock close to Rs 48-50 of EPS for this fiscal on a sales and if I see the Sandesh Brand Equity, it sells more than one million unit per day on daily basis of the daily newspaper. Along with that the company is having a weekly magazine in the name of Stree. So if one sees all these things, I don't see the valuation of the business which is approximately Rs 250-300 crore because if I see the printing press of the company, which is available in Bavnagar, Rajkot and other places of Gujarat, total five places has a replacement value of over Rs 300 crore and Rs 200 crore worth of cash and cash equivalent, so total of Rs 500 crore. Recently in 2007-08, the promoters had come with a buyback at a price of Rs 180 but there was very small tendering into that particularly space. It is a very illiquid stock with a low volumes and I feel this stock will have again an open offer because the promoters would actually be looking to merge Sandesh Procon Pvt Ltd with Sandesh itself and before that they would like to buy out the equity from the free float available in the space."

"If I have to tender the stock, I would not be looking into tendering the stock in less that Rs 350 because I feel there would be a definite open offer from the promoters side into the space and a company that is available only near to its cash levels, from a years perspective it is available below its cash level. I think this is no brainer from a longer term perspective. However, I am pegging a target of close to Rs 350 from a 6-8 months perspective. On a longer term this stock should be built into ones portfolio because looking at the projects of Sandesh Procon Pvt Ltd, if the promoters are successful on buying back those shares from the open market they will definitely merge this particular entity with Sandesh Ltd and then the valuation would be mind boggling."