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May 22, 2012, 12.11 PM IST
Siyaram Silk Mills has potential to test Rs 400, says Aashish Tater, Head of Research, Fort Share Broking.
Tater told CNBC-TV18, “Siyaram Silk Mills is better of the two lots and is available at a mouthwatering level compared to other peers because it has not a stretched balance sheet and the company pays you a dividend of almost Rs 7.50 for this fiscal they have already announced and they have been increasing their payouts.”
He further added, “If I take a call on the marketcap to sales ratio, here you are getting a company at almost 0.3 times and on enterprise value at less than 0.4-0.5 times. A textile company with brands like J Hampstead, Oxemberg, Siyaram itself is a brand along with couple of others like Siyarams MSD and MiStair, I think this company would definitely hog limelight once either the Reid & Taylor IPO or the sell proceeds happen and people would try to focus on similar strategies where these kinds of stories might crop up. Though Siyaram is in no hurry to sell any of its products but what will happen is a brand revaluation that will take the company to close to Rs 400 from current Rs 260 odd levels, which is roughly 50% on upsides.”
“If you take a call from year-on-year (YoY) perspective, the results have been disappointing and we feel even on next year the company would not be doing more than Rs 70 of EPS but you are getting a textile company with brands like these on the enterprise value front, we feel the company is relatively undervalued and if I try to make all the things club together, we feel the stock on downside is protected to Rs 230-240 and with these kind of developments happening across the sector, what we saw in Pantaloons might be repeated in S Kumars through Reid & Taylor, we feel the stock also has a potential to go and test that Rs 400 odd mark and these stocks have always been into limelight as a cartel because if S Kumars goes off, other stocks take a proxy and they also tend to go up. So another 50% from a textile space from next five-six months perspective, we feel this is the next sector where people can mint some money, switching from old quant model strategies.”
Disclosure: I do not have holdings in the stocks discussed.
May 18 2013, 17:26
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