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May 08, 2012, 09.38 AM IST
Shalimar Paints can move to Rs 500 in next four months, says SP Tulsian, sptulsian.com.
Tulsian told CNBC-TV18, "Yesterday Shalimar Paints has posted very good results. If you see for Q4, the topline is about Rs 150 crore with EPS of close to about Rs 16 while for whole of the FY12 EPS has been at about Rs 39 and this is in the top five paint companies."
He further added, "If you go by the PE multiples of other paint companies whether you take Asian Paints, Kansai Nerolac or maybe the Berger Paints or AkzoNobel all are ruling at a PE multiple of Rs 25 plus and this company is ruling in a single digit PE multiple. As I said that Rs 39 EPS for this year, but I am more enthused by the Q4 working generally because we have not yet seen the company results having posted by the other paint companies except for Kansai Nerolac, which has posted flat results or I would say that lower than expected results for Q4, Asian Paints will be posting the results today and the other two companies Berger Paints and AkzoNobel have yet to post their results, but I won’t be comparing the results of this company with Asian Paints, but one can say that there is nothing exceptional that one can expect for a March quarter from a paint company."
"Overall these companies have been showing a linear growth of maybe about 2-3% quarter-on-quarter except in the second quarter which is always seen as a good quarter. But this company has really surprised with an EPS of close to about Rs 16 and if you take the EPS having posted of about Rs 39 for FY12 it is likely that FY13 should be having an EPS of at least Rs 50 plus and if you go on the forward PE multiple then the share is ruling less than PE multiple of 7.5-8."
"Apart from that there has been stake sell news pending, the promoters of the company 62% stake held by two families one Jindals and one Jhunjhunwalas and both have expressed their intention that they want to exit from the company, they want to sell their stake and this process was initiated maybe four to six months back and now it is gathered that the same process is likely to get initiated and last time when the sell process was initiated, the share has moved to as high as Rs 900 because there are huge interest having evinced by the other competitor as well as the new player."
"So I am expecting that purely on fundamentals at a PE multiple of 8 the paint industry is the only industry which has been posting double digit growth in top-line and bottom-line for last one decade or so. So going purely on the fundamentals, I think the stock has potential to move to Rs 500 in next four months. But if somebody can play on this stake sell news and if that gets initiated in next couple of months then the share can even move to about Rs 700-750 also."
Tags: Shalimar Paints
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