Godawari Power can move to Rs 150: SP Tulsian

Godawari Power & Ispat can move to about Rs 150 in next six months, says SP Tulsian, sptulsian.com.

Tulsian told CNBC-TV18, "Godawari Power & Ispat is a Chhattisgarh based integrated steel maker company. They have entire value chain to start with, they have the iron ore, palletization plant, the captive power generations and they have their sponge iron. They make the billets and blooms which is converted into the CTD bars and then into the H.B. Wires. So if you see the entire value chain from iron ore to H.B. Wire or maybe the CTD bars, they have a reasonable capacity of close to about 4-5 lakh tonne per annum."

He further added, "Their performance has been very consistent with a very low equity base of close to Rs 32 crore. Their topline has been at about Rs 2,000 crore for FY12 with a PAT of close to about Rs 85 crore, which translated into an EPS of Rs 26-27 but because of the firmness now or maybe the improvement in the productivity as well as the capacity enhancement, I am expecting the company to show in FY13, expecting that the company should be able to post an EPS of close to about Rs 30."

"Even the dividend, there has been an expectable dividend payout by the company to the extent of about 25% for FY12. So taking all this into account, maybe on a forward earnings, the share is ruling at a P/E multiple of Rs 4 on the historic, it is ruling at a P/E of Rs 4-4.5 while all the other steel makers – I am not talking of the larger ones, they are ruling at a P/E range of anywhere between Rs 7 and Rs 8."

"Their debt position is quite comfortable, they have a very low equity base of about Rs 32 crore with respectable promoter holding of 65%. So taking all this into account, even a price to book is Rs 0.6 for the stock. So taking all this into accounts, I am expecting that price can move to about Rs 150 in next six months with a very good or the positive view over next couple of years also if someone can held for that longer period."