Lakshmi Machine Works can move to Rs 2400: SP Tulsian

Lakshmi Machine Works can move to Rs 2400 in six to eight months time, says SP Tulsian, sptulsian.com.

Tulsian told CNBC-TV18, "Lakshmi Machine Works is the market leader in the textile machinery. They are amongst top three in the world for making entire range of spinning machinery. The present market share of the company in India it is close to about 60%. They have been consistently doing well. They are sitting huge cash and that is why they resorted for share buyback last year. The buyback brought down their paid up equity to about Rs 11.30 crore as of date."
He further added, "The interesting part about this share holding pattern of the company is that the promoter stake is only about 28-29% but 12 HNIs hold about 38% stake. These 12 HNIs have been holding stake for ages, considering confidence and financials of the company."
"For the first half they posted a topline of about Rs 1,100 crore with a PAT of about Rs 90 crore. This translates into an EPS of about Rs 80. The company has been traditionally utilising sundry creditors to a great extent. Corresponding to that, they have huge cash balance of Rs 650 crore in their books as of September 30. With that per share value comes to about Rs 580."
"Since they have higher current liabilities it means the net ratio is at negative. If we knock off cash balances and still take the cash balance at about Rs 350 crore it gives a value per share of about Rs 320-330. For the last couple of years we have seen a little dullness in the textile industry because of no investments coming in. But now the cycle is picking up."
"One can expect an EPS of about Rs 200 for FY12 and an EPS of about Rs 215 in the time to come. The share which is now ruling close to Rs 1,900 can move to Rs 2,400 in six to eight month time. It is very consistent company with very limited downside risk from hereon."