Welspun India can move to Rs 60: Tulsian

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Welspun India can move to Rs 60: Tulsian

Welspun India can move to Rs 60, 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 Welspun India See messages about Welspun India Welspun India BSE | NSE 31/05/12 Are Mutual Funds betting on Welspun India?

Welspun India can move to Rs 60, says SP Tulsian of sptulsian.com.

Tulsian told CNBC-TV18, "If I go by the FY10 performance of Welspun India, it has posted topline of Rs 1,900 crore with EPS of about Rs 22 and if you take the performance for first nine months, there is no issues involved with the topline of the company but because of the rising cotton prices they have shown a dip in their bottomline and in fact December quarter has been quite bad."

He further added, "They are the largest terry towel maker in the country and second largest in the world. So they are largely catering to the high end customers like the five star hotels and all that and they have a fixed price contract which remains valid for a quarter or so. So largely on that account they had a hit in the December quarter."

"I am not expecting very good bounce back or maybe the recovery in March quarter as well but if one can take a call for FY12 onwards because looking to the global cotton production it is high by 30% in US, about 15% in China. So I think the scenario in the cotton front is likely to be quite stable and I am expecting the company to post an EPS of about Rs 18 to Rs 20 for FY12."

"Because of this poor performance in Q3 the share has taken a dip, which use to rule at about Rs 95 to Rs 100 to as low as Rs 40-41. If I expect an EPS of close to about 17-18 for FY12, I think it is available at a PE multiple of 2.5 times. There are no issues involved with the promoters, with the company, with the performance it is only a matter of time which can give a good re-rating to the stock and good valuation. The share can move to Rs 60 plus in next about six months time."