Sterlite Industries can test Rs 150: Tulsian

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Sterlite Industries can test Rs 150: Tulsian

Sterlite Industries can test Rs 150, says SP Tulsian of sptulsian.com.

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Excerpts from Bazaar on CNBC-TV18 Watch the full show » ALSO READ See previous views by SP Tulsian See what other Experts & Brokerages are saying about Sterlite Ind See messages about Sterlite Ind

Sterlite Industries can test Rs 150, says SP Tulsian of sptulsian.com.

Tulsian told CNBC-TV18, "Sterlite Industries is a very interesting integrated non-ferrous metal play. Sixty five percent stake of Hindustan Zinc is held by this company, 51% in BALCO and 29.5% in Vedanta Aluminium. There are talks that government is willing to shed their 49% in BALCO in favour of Sterlite Industries. Sterlite Industries can then become 100% owner of the BALCO. The kind of valuations being talked for 49% stake of BALCO is close to Rs 2,800 to Rs 3,300 crore."

He further added, "The market capitalisation of the company is about Rs 34,000-35,000 crore and 65% of the stake held by the company in Hindustan Zinc is having a market value of about 35,000 crore. I don't think that this can be given as an investment value because result of Hindustan Zinc is getting consolidated."

"Coming to the financial performance of the company, their topline was close to USD 8 billion considering the first half and EPS was about Rs 16-17, this means share is ruling at a PE multiple of 6. I don't think that this kind of valuations have ever been given even to pure ferrous or non-ferrous metals. This is because non-ferrous metal stocks have always carried a higher PE multiple of about 200 bps than what it is given to the stocks like JSW Steel, Tata Steel."

"Traditionally, they have all been ruling at a PE multiple of 9 to 10, so in my view even this should rule at those levels. Even the financial position of the company is not very bad. They have a net debt of about Rs 5,000 crore. Considering the cash flow earned by the company every year and plans ahead, the stock looks to have bottomed out at Rs 102-103. If somebody can keep a view of about 12 months they can see a price of Rs 150."