Swan Energy a good bet, says Ashish Tater

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Swan Energy a good bet, says Ashish Tater

Swan Energy is a good bet. There is a limited downside in the stock, 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 Swan Mills See messages about Swan Mills

Swan Energy is a good bet. There is a limited downside in the stock, says Ashish Tater, Head of Research, Fort Share Broking.

Tater told CNBC-TV18, "Swan Mills is one company which was referred as a BIFR in 1995-96 and since then the company has turned around, thanks to its real estate. Now the company knows where they want to go next, they have diversified into power sector and all the cash that they would be getting from the sale of their two real estate projects one in Sewri and another one in Kurla, they would be channelisng the entire cash flow into power projects. Now if I take a call that they have taken a stake of 49% in to the Gujarat Pipavav Power Company (GPPC), I think this is one stock which is a good bet because I feel there is a limited downside."

He further added, "What is happening right now to real estate cum these kinds of stocks is people are using the discounted cash flow model right from 11% when it was hovering around Rs 120-125 mark to 18% and that is exactly where it is trending right now. If we take a call from four years perspective, a stock is going to give you discounted cash flow earnings of close to 17-18% why would you not treat it as a portfolio bet. So on a conservative side, we have valued this stock that the worst cum worst, the stock should be hovering around Rs 65-72 odd mark but on upside there could be a potential of 40-45%."

"For the first time the company has actually turned back into black this is because of their strong cash flow generations from real estate projects and because of this GPPC stake they will be getting almost Rs 70-80 crore in terms of carbon emission rights over 8-10 years right from FY13. This quantum is not exactly decided by UNFCC, so we are still waiting of the report on what could be the exact amount of cash flow. But I think before that also if someone wants to hide into a safe stock with good quality assets this is one stock that people can look at."