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Last Updated : Jan 15, 2018 10:06 AM IST | Source: CNBC-TV18

Buy Kingfa Science: SP Tulsian

Watch the interview of SP Tulsian of sptulsian.com with Anuj Singhal, Latha Venkatesh & Sonia Shenoy on CNBC-TV18, in which he shared his readings and outlook on fundamentals of market and specific stocks.

CNBC TV18 @moneycontrolcom

Watch the interview of SP Tulsian of sptulsian.com with Anuj Singhal, Latha Venkatesh & Sonia Shenoy on CNBC-TV18, in which he shared his readings and outlook on fundamentals of market and specific stocks.

Below is the verbatim transcript of the interview.

Latha: You also have a long term bet today?

A: I have a Kingfa Science, in fact this stock was recommended by me on November 27th less than couple of months back and the target is seen having met. In fact we have seen the huge buying on the Friday on both the exchanges with a volume increase of maybe about 15 times on a delivery bases or maybe overall volume. Mind it that this is company which are making reinforced polypropylene and that is a metal substitute which are very closed guarded technology Chinese promoters are holding 75 percent stake in the company. In fact they were holding much more maybe couple of years back about 80 percent take but because of the listing guidelines they have brought it down and now the expansion is being carried out into the company. Company is having existing five plants of 35,000 tonne per annum aggregate capacity of five plants. Company is setting up a new plant of 70,000 tonne per annum at Chakan.

I don’t know the exact progress that would be the reason for the stock to really move up on Friday maybe with the expansion seen having completed because company came out with a rights issue at Rs 750 about four- five or maybe six months back to finance that expansion. But as I said that I don’t have the exact clarity that what is the status of that expansion but once that expansion happens the capacity will tribble, from 35,000 tonne to 1,05,000 tonne with company having six plants across all the geography. This plant will be used again to cater to the automobiles because reinforced polypropylene, as I said it is a metal substitute and is used in the widely used in the automobiles to reduce the weight, to increase the average and all sort of things.

If you really see the situation now on the equity front also in spite of this rights issue equity is very low at Rs 12 crore plus and Rs 12.11 crore as I said promoters are holding75 percent who is a Chinese promoters. Chinese are very fussy in parting with the technology and all that so all the expansions will be carried out in this company. As indicated from the management and all that probably I won’t doubt the capacity getting doubled from here from 1,05,000 to 2,10,000 maybe in next two to three years.

In fact, if you see the improvement in the performance has started weeing coming in from Q2 of FY18. In Q2 of FY18 the earnings per share (EPS) was at about Rs 4.20 which was at Rs 2.90 that means a sequential growth of about 30-40 percent and with H1 FY18 EPS at Rs 7 which if you translate that it should give a FY18 EPS of anywhere between Rs 17-18 but after expansion the EPS can rise to Rs 30-32 also. So taking all this into consideration share now ruling closer to about Rs 1,000 can move to a level of Rs 1,200 in next six months or so.
First Published on Jan 15, 2018 09:44 am
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