Century Textiles can move to Rs 350: SP Tulsian

10706 Investors following Century. Share this News with them.

0

Like this story, share it with millions of investors on M3

Century Textiles can move to Rs 350: SP Tulsian

Century Textiles can move to Rs 350 in six month time, says SP Tulsian, sptulsian.com.

Post your opinion here

 

0

Tweet

Share on Tumblr

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 Century See messages about Century

Century Textiles can move to Rs 350 in six month time, says SP Tulsian, sptulsian.com.

Tulsian told CNBC-TV18, "Century Textiles is a multi divisional company - they are engaged in cement, paper, textile, retail and chemical. In fact, real estate was a new addition about 18 months back. They have shifted their Mumbai textile mill near Surat and they are developing that property, which eventually will give them anywhere between 40-60 lakh square feet over the next five years."

He further added, "So consider total 40 acres of land after knocking off 10 acres of land which is in dispute with Wadia's over the lease and change of user. The real estate division can really fetch them very good recurring income on a continuous basis once they complete that over next three to four years. The kind of amount they will be requiring on development of that work is not more than Rs 3000 crore over next four years which the company is generating every year, so there won't be much pressure."

"Apart from that, I am relying more on the cement division. If you see the first half, the company has not really performed very well at all. In fact, the payment of three installments of the advance tax has been the dampener. The company has virtually paid nil advance tax for the first three installments and that has really disappointed the market; stock fell to about Rs 225."

"But considering the present cement working of all the companies, and in fact some of the results have already started coming in for Q3, I am holding quite a positive view on the stock. Since this is the most inefficient performance having posted by the company in last two quarters, they have the chances of improving those performances which can vastly re-rate the stock. I am not relying on the first two quarters results but if you take full year's working for FY11, it's a USD 1 billion topline company, close to about Rs 5000 crore."

"As I said FY12 has been washed out first two quarters, but FY13 can give them a topline of close to about Rs 6000 crore. One can expect an EPS of anywhere between Rs 36-40. If you see the present market cap of Rs 2500 crore,
and even if you add the net debt of about Rs 2500 crore, the enterprise value works out to about Rs 5000 crore. While the cement division alone of nine million tonne can get valued close to about Rs 6000 crore, real estate can get valued to close to about that Rs 6000 crore."

"There was some talk that company or the management is looking to sell their 2 lakh tonne paper plant which they have in Uttarakhand and that can get sold for anywhere between Rs 1600-2000 crore. Once that happens, the entire amount will be used to de-leverage the balance sheet. It can virtually make it a debt free company."

"So taking all this into consideration, I think this is the most ideal stock for a fundamental investor with a view of three to five years. I am not saying that in the short run the stock is not capable to give a return, maybe in six months it can move to Rs 350, but if somebody can keep a view of three to five years, I think this stock is capable to give a 20% annualized return over this period of time."