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Sep 06, 2011, 10.30 AM IST
Wendt (India) is looking good for long term, says Aashish Tater of Fort Share Broking.
Tater told CNBC-TV18, "Wendt India is an exact proxy to what Alpha Laval was where the promoters were paying to acquire new companies at an annualized equivalent value of 11.5-12%. Now this is one stock which we have been tracking as a delisting candidate for last one year. But now we have changed our view and we feel that this is a portfolio bet rather then just chasing a delisting candidate when it was hovering around at Rs 1000 mark."
He further added, "What is interesting me is that its parent Winterthur Technology has been taken over by 3M India. The company is promoted by two groups, an Indian promoter from the Murugappa group Carborundum universal and now 3M India and they control almost 78%. So I donít think that 75% trigger offer any of these two promoters would like to reduce their holdings."
"On the contrary the company law board Carborundum Universal has actually been able to get a sanction for the open offer trigger getting on hang. That means that right now there is no open offer for the company but very soon what gives me an impression is that the open offer will come and that mandatory trigger would actually happen and thus there will be hardly any float left into the market and then the real story would begin."
"Now if you take a call from a fundamental perspective, 3M India trades at 30 odd PE multiple. Its same group company is trading far below. Now taking a call from annualized equivalent value, which was paid to Winterthur technology, I think the fair value works out close to Rs 1862 odd mark, Rs 1860 to be precise. Thus there is good scope in terms of upside from current levels."
"Now what will happen if the company does not get that clearance of open offer? The stock might correct by 8-10% thatís I think the maximum downside for this particular stock and looking at itís rewarding shareholders potential in terms of dividend last year, they paid I think Rs 25. This is one stock that should warrant portfolio weight from longer term perspective. And thus we are very aggressive in suggesting that one should definitely go for a portfolio bet for this stock."
May 22 2013, 13:11
- in MARKET OUTLOOK
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