Vesuvius India can test Rs 500, says SP Tulsian

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Vesuvius India can test Rs 500, says SP Tulsian

Vesuvius India can test Rs 500 in six to eight month time, 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 Vesuvius India See messages about Vesuvius India

Vesuvius India can test Rs 500 in six to eight month time, says SP Tulsian, sptulsian.com.

Tulsian told CNBC-TV18, "Vesuvius India makes high performance specialty refractory products. The company has already announced results for September quarter. The results have been more or less on rising trend. In calendar year 2010 they had a topline of Rs 445 crore. They have been achieving a net profit margin of close to 10.5-11%. For first nine months also the same trend is seen in its performance. The PAT margin is maintained at 10.65%."

He further added, "The best part is that company is improving topline. We have already seen 20% growth on a comparable basis for nine months. This has resulted into a topline of close to Rs 395 crore for first nine months of the calendar year 2011 against Rs 445 crore of calendar year 2010. That translates into an EPS of about Rs 25-26 because Rs 20.50 has been the EPS for first nine months. If one translates that, it rules at a PE multiple of Rs 14."

"Traditionally, for the last five years Vesuvius has been ruling at a PE multiple of about 16 to 20 because of their quality and parentage. Vesuvius of UK holds about 56% stake, institutional investors and HNIs hold around 30% stake in the company. The networth of the company comes close to Rs 300 crore, book value of share is at Rs 150. So it is ruling at a price to book of 2.5."

"Considering all this, I find this stock quite interesting. I am not playing out on delisting move, which cropped a couple of years back. Purely on fundamental basis considering an EPS close to about Rs 26-27 for current year (2011) and next year they should be able to post an EPS of Rs 32. This is a very consistent stock. One can expect a price of Rs 500 in six to eight month's time."