Wockhardt a good investment bet: SP Tulsian

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Wockhardt a good investment bet: SP Tulsian

Wockhardt is a good investment 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 Wockhardt See messages about Wockhardt

Wockhardt is a good investment bet, says SP Tulsian, sptulsian.com.

Tulsian told CNBC-TV18, "Wockhardt is a contrarian call or maybe unusual victim of the recent developments which are happening at the Bombay High Court in fact the FCCB dispute which has been going on for the last six months got resolved last month but suddenly the new dispute cropped up which has stalled the deal of the company to sell its nutrition business to Danone for USD 355 million. If you see this transaction has happened in the first week of August at USD 355 million and if you see of this USD 355 million half amount will come in the Indian company and half will come into the overseas company but if you take the exchange gain the company has stood to gain by 15%."

He further added, "If this USD 355 million was converted in the August 2011 that was working out to 1,600 crore now that is getting worked out to 1,850 crore and considering the debt in the books of the company which is 3,200-3,300 crore because company has been able to because of the efforts of the promoters they have sold their personal assets, they have sold 1-2 animal healthcare division and all sort of things, they have made all the efforts to bring back the company on track and this is the sixth-seventh largest pharma company. I am quite hopeful that the hearing which is now fixed on 13th January at Bombay High Court is likely to get resolved with the FCCB holder. I don't think that the small litigation can stall the deal of 1,850 crore."

"I am quite hopeful that if not on 13th January maybe one-two adjournments can happen in the proceedings and then the matter will get resolved. So post that the stock has the potential in fact we have been witnessing profit booking in the stock because it moved to 450 maybe couple of months back and since then it has seeing the profit booking. So I feel that stock has bottomed out and if you see the financial performance also it has been continuously improving in fact there are lot many exceptional items, forex losses so there is no point in taking a call on the bottomline but topline for FY13 can be close to about USD 1 billion at least 4,600 to 5,000 crore and that will result into a respectable bottomline as well to 400 or maybe 450 crore so taking all this into consideration this gives a good idea for someone because people generally have been seeing entering in the stock when it starts moving up maybe of them have bought the stock at Rs 400 more than Rs 400 but I think now this is the ideal time. You may have a downside risk I am not saying that it cannot fall from hereon, it can, it can fall to a low of Rs 250 but I don't think that should be a cause of concern but if somebody can keep a view of about six months they should be able to hopefully see a price of Rs 350 so a very stable and sound investment at the current level."

Disclosure: I have personal holding in Wockhardt.