Century Textiles has target of Rs 750: Aashish Tater

Aashish Tater, Head of Research, Fortunewizard.com is of the view that Century Textiles has target of Rs 750.

Tater told CNBC-TV18, "We feel Century Textile is ready to make a sharp upmove almost 100 percent from current levels. As a team we are forecasting that there will be three major key triggers that would take this asset heavy company to its fair value at least once in next 12-15 months.”
He further added, “If you see the company’s current capacity in terms of cement, by next year, it will be somewhere around 11.8 million metric tonne and this could itself fetch them a valuation of around Rs 7,500 crore.”
“The next big trigger is that the company is going to hive off its paper division to key players in the market, which according to media report has to happen somewhere between Rs 2,200 crore and Rs 2,850 crore which will again be a positive given that enterprise value is roughly around Rs 6,500 crore.”
“The recent announcement of phase I of its real estate project development or 6 lakh sq ft that company is going to go on rent basis will fetch them a pretext profit of almost Rs 100 crore from next year because it will take another six months for the company to complete the project expansion.”
“So, here you are sitting on a company that is going to do a cash earnings per share (EPS) of over Rs 60. This year the company will end with the cash EPS of Rs 30 though there was negative on bottomline. However, because of high depreciation component, this translates into Rs 30 of cash into this fiscal itself.”
“For next fiscal, we are forecasting Rs 60 of cash EPS and a positive EPS of around Rs 16-17. Given these all factors, we feel that the value of the equity player should not be less than Rs 7,350 crore in terms of marketcap according to our projection models.”
“Within next 12-15 months, the stock is ready for a sharp upmove from current levels. We are pegging a very aggressive target of Rs 750 and even higher levels from current levels given all this positive developments that we expect over next 12-15 months.” Disclosure: It is safe to assume stock discussed has been recommended to clients.