Sutlej Textiles can move to Rs 275-300: Tulsian

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Sutlej Textiles can move to Rs 275-300: Tulsian

Sutlej Textiles and Industries can move to Rs 275-300, says SP Tulsian, 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 Sutlej Textiles See messages about Sutlej Textiles

Sutlej Textiles and Industries can move to Rs 275-300, says SP Tulsian, sptulsian.com.

Tulsian told CNBC-TV18, "Sutlej Textiles and Industries is a KK Birla Group Company, it's an old company having 5 plant and they have 250,000 spindles. The working of the company for FY11 has been fabulous; topline was Rs 1,600 crore plus, the company posted an EPS Rs 105 and cash EPS was Rs 190 and that's a reason that company has declared a dividend of 75% also that is Rs 7.50 including the special dividend but the share has already gone ex-dividend, one should not play on the dividend strategy."

He further added, "But if you see the working of the companies especially the spinning companies they have been facing lot of problem, the results are likely to be bad but that may not be the case purely with Sutlej Textiles because they are an integrated company with 5 plant, so they should be able to at least post reasonable results. I won't say that the Rs 105 EPS will get repeated but one can expect an EPS of at least close to Rs 45-50 for FY12 so that translates into a PE multiple of about 4, which are slightly lower than the comparable peers of this size and this magnitude."

"Coming on the book value, the company has book value per share of Rs 225 so share is available below its book value and because of this fear the share has really corrected in these last couple of months and I think that share has bottomed out. If one can keep a view of about 12 month the share has the potential to move back to about Rs 275 to Rs 300 but fundamentally very strong company and I don't think that there are any downside risk from hereon."

Disclosure: I have no personal holding in the above stock.