Hyderabad Industries can touch Rs 600: SP Tulsian

Hyderabad Industries can touch Rs 600, says SP Tulsian of sptulsian.com.

Tulsian told CNBC-TV18, "If you see the Q1 results of Hyderabad Industries there has been topline growth and margin expansion. For whole of FY12 the company had a PAT margin of close to about 7% on the topline of close to about Rs 860 crore and if you go by the present Q1 results, they have posted a topline of Rs 330 crore with PAT of Rs 33 crore. So that indicates PAT margin has improved from 7% to 10%."
He further added, "We have seen the volume growth also taking place by about maybe 20% plus on a comparable quarter of the previous year and for Q1 the EPS has resulted at about Rs 44. But I am not taking the same extrapolation, taking this Rs 45 as a benchmark that FY13 can result into an EPS of Rs 160-170 or Rs 180. On a conservative basis I have taken that to be anywhere between Rs 120-125 and the EPS which was at about Rs 81 for whole of FY12 and now EPS of Rs 44 for Q1."
"The company declared a dividend of Rs 18.50. So I am hopeful that this time the dividend payout is also likely to improve for FY13, which would be anywhere between 22-24 if you take the same dividend payout ratio of 25% to be maintained by the company which can also result into a yield of about 5% on the stock."
"So overall considering their strong presence in the roofing business for which they are providing the total solutions to the building, industrial structures and all that again this stock looks quite undervalued going by the expected EPS close to about Rs 125, ruling at a PE multiple of less than 4 and even the book value is close to about Rs 500. So taking all this into consideration I am expecting a price of Rs 600 in 12 months with a very minimal downside from here." Disclosure: I have no holdings in the above stock.