Zydus Wellness can move above Rs 600: SP Tulsian

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Zydus Wellness can move above Rs 600: SP Tulsian

Zydus Wellness can move above Rs 600, 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 Zydus Wellness See messages about Zydus Wellness

Zydus Wellness can move above Rs 600, says SP Tulsian, sptulsian.com.

Tulsian told CNBC-TV18, "Zydus Wellness is a subsidiary of Cadila Healthcare , a Cadila Group company in which Cadila Healthcare is holding 70% stake out of the promoter stake of 72.5%. This is a life and healthcare segment company. They have four strong brands which includes Sugar Free and Naturalite. The financial performance of the company has been consistently improving."

He further added, "Zydus Wellness was acquired by Cadila Group about five years back when it was in mess. At that time the company had only one product and thereafter Cadila Group has added all these products. For the first half they posted a top-line of Rs 175 crore with PAT of about Rs 25-26 crore which results into a PAT margin of about 15%. It is a debt free company."

"The company has a cash balance of about Rs 90 crore which is largely helping them to launch new products and incur marketing expenses. The best part is that they have been able to maintain PAT margins and it has been gradually improving. If I extrapolate Rs 175 crore turnovers, it gives a turnover of about Rs 350-360 crore for FY12 with EPS close to Rs 14."

"But the management has given a guidance that they are expecting top-line to reach about Rs 500 crore maybe by FY13-14. So if I take a call of about 40% growth in next two years, it indicates that EPS could reach to about Rs 20 by FY13-14. The share has corrected in the last couple of months. It use to rule at about Rs 500 plus."

"One can acquire this stock but not from a near term point of view. If one can keep a view of 12 months I am quite confident that it can move past Rs 600. On the lower side, I do not think much downside is seen from hereon. It may fall by about Rs 20-30 or Rs 40 maximum but from a one year horizon I expect it to cross past Rs 600."