TVS Srichakra can touch Rs 400: SP Tulsian

Tulsian told CNBC-TV18, "I have not been holding a positive view on the tyre stocks because of rising prices. This is because the pricing power is not available to the manufacturer but this company seems to be an exception largely because of the high profitability or because of the very low equity base maybe closer to about Rs 8 crore. If you see their EPS it is at about 50-51 while their cash EPS is as high as 72-73. This company makes two and three-wheelers tyres and tubes, the complete range. They supply to TVS Motors, Bajaj Auto, Hero Honda, to all the two-wheeler majors. Their topline has been close to Rs 1,100 crore for FY11 and the company has declared a dividend of 125%. So it’s a very stable financial performance."

He further added, "On their pricing power, one can say that that seems to be different in case of this company maybe because of their good relations with the customers or maybe the cost control which the company has because we have been seeing the increase in their financial performance every quarter. I consider this to be a very safe stock and a price target of Rs 400 can be seen in the stock in the next six-eight months time."