Wheels India a good long term bet, says SP Tulsian

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Wheels India a good long term bet, says SP Tulsian

Wheels India is a good long term bet, 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 Wheels See messages about Wheels

Wheels India is a good long term bet, says SP Tulsian, sptulsian.com.

Tulsian told CNBC-TV18, "Wheels India is a TVS Group company and if you see the shareholding pattern, it has 86% promoter holding in which 50% is held by TVS Group and about 36% is held by Titan of Europe. The company is mainly into sourcing of the steel wheels for UV, for CV for off-road equipment, for tractors and because of this steel business they have capacity of one million wheels per annum and having six plants spread across the country and they are catering to all the auto majors whether you talk of any auto makers be it Tata Motors, Mahindra and Mahindra, Hero Motocorp etc."

He further added, "If one sees the financial performance of this company for FY11, the company posted a growth of 50% in topline and about 90% growth in the bottomline. Because generally seeing FY11 results you feel this is an end because Rs 24-25 EPS cannot get accelerated from here on which the company has posted in FY11 but if we take a call on first half (H1) of FY12 results, they have seen a growth of about 16% in topline but again the bottomline has grown by about 50% that means Rs 18-19 EPS in H1. If one extrapolates the same and there is not reason not to do that then H2 also will be having EPS around Rs 35-36 close to whole year of FY12. That means the company is going into the trajectory of EPS of close to about Rs 40 from here on maybe from FY13 onwards, that makes the share available at PE multiple of close to about 7. Book value is very healthy at about Rs 272 -275 crore ( Did not mention crore) by March 31, 2012, so delisting could be a big trigger. It would be interesting to see whether both the promoters the Indian and foreign will be willing to shed their holdings down to 75% which they will have to make by June 2013."

"Wheels India is a long-term stock but one should keep a view of about Rs 350 in next six months or so which I hope the target is achievable and capable to do so."