Empee Distilleries can touch Rs 140-150: Tulsian

Empee Distilleries can touch Rs 140-150 in next two-three months time, says SP Tulsian, sptulsian.com.

Tulsian told CNBC-TV18, "Yesterday, we have seen huge volume in Empee Distilleries, about maybe over two lakh shares. Generally, this stock has an average volume of about 5,000-7,000 shares daily. If you go by their core business model, they have their presence in four southern states. Earlier they were operating only in Tamil Nadu and Kerala, but last year maybe from April 2010, they have completed their distillery production in Karnataka as well as in Andhra Pradesh. If you see, there is entry barrier in all these four states because state is the distributor. Even if you have your distillery and if you do not get the supply order from the government, you will not be able to do anything."
He further added, "The company in the current financial year has been focusing more on increasing their bottom-line and keeping their top-line stagnant by moving into the higher brand and moving into the higher margin products. The reason for sudden, huge volume yesterday in the stock is that the company has its land, the realty development project in Sriperumbudur and it is likely to book a profit of about Rs 100 crore in next six-eight months time. The project is on the completion stage and they are going to book the profit from that project and that can give a cash flow of about Rs 100 crore to the company."
"The present marketcap of a company is close to Rs 200 crore with a book value of Rs 125. The share is ruling below book value. Even if you take the EPS for current year, it is likely to be Rs 11. For next year, for FY12-FY13, the EPS is likely to be Rs 12.50-13. So, the distillery shares are ruling at about P/E multiple of 7, maybe with a price to book of 0.8-0.9 on a forward earnings. All this and the recent interest, which we have seen in the stock, probably can take the share price to move to about Rs 140-150 in next two-three months time."