India Glycol can test Rs 180-220: Aashish Tater

India Glycol can test Rs 180-220 in next three to six months, says Aashish Tater, Head of Research, Fort Share Broking.

Tater told CNBC-TV18, "India Glycol is one interesting business whose fortune is directly co-related to crude outperformance, which is one of those bets that I feel is relatively going to give better returns to investors if crude keep on outperforming. While its peers business is depended on petroleum derivatives, this particular company produces gycol and ethanol through molasses. So every time there is an increase in crude prices, there is a direct benefit in terms of passing on cost to customers."
He further added, "If I take a call from fundamental perspective, we expect that the company would be doing close to Rs 10 of EPS for next three quarters. That means Rs 30 for the remaining years. They already did close to Rs 9 for the first quarter,  so on Rs 40, with a positive trend on crude, I think before Rs 111 on closing basis is tested, the stock might go and test Rs 180-220."
"The promoter has been gradually increasing the stake in the company and the stock liquidity is getting stuck. Thus there is a promoter who is buying own company at a PE multiple of 4.5 times because even they can sense that their peers are actually not going to benefit as much as they can because of the passage of molasses to the customers directly when crude outperformer."
"From all these parameters, if someone is looking for 20-25% gain from next six months perspective, I think this is one bet that one should be definitely looking at. We have a medium term target of close to Rs 180- 220, but one should keep a strict stop loss of Rs 111 on closing basis on this particular stock as the technical would shape out badly after that or if Brent closes below USD 98. On both the parameters, the stock should actually be squared off; otherwise our level should be tested in next three to six months."