Buy Fresenius Kabi Oncology, target of Rs 140: SP Tulsian

SP Tulsian of sptulsian.com told CNBC-TV18, "Fresenius Kabi Oncology is the leading company making the chemotherapeutic drugs that is for cancer from development, manufacturing and marketing across the globe. They have two manufacturing plants, one at Baddi in Himachal Pradesh and second in Kalyani near Kolkata."

He further added, "The financial performance for FY13 has been good with topline of Rs 600 crore, EPS of Rs 5, PAT of Rs 80 crore and EBITDA of Rs 106 crore. The promoters have reduced their stake from 90 to 81 percent and then thereafter SEBI passed the order for minimum public shareholding norms. They had litigations, but I am not going into the background."

"Finally yesterday evening SEBI granted them permissions to go ahead with delisting, but with a condition. SEBI said that if you want to go ahead with the delisting move, your promoter shareholding will be taken at 90 percent. So you have to mop up 5.01 percent stake from the market, that is your holding should rise to 95.01 percent stake after the delisting move and against that the company is now holding 81 percent stake," he said.

Tulsian further said, "So 14.01 percent stake has to be acquired by the promoters to make the delisting successful. We all know that in the past promoters have indicated a price of Rs 130 as the indicative price for delisting which now will not hold. So two options before the promoters if they are really serious, they want to go ahead with the delisting plans, I think they will not get the share maybe at a price of even Rs 175-200 or I will not be hesitating in saying that the share can even breach Rs 200 also if the serious delisting move is initiated by the promoters."

"Alternatively if they do not move with the delisting plan they have to bring it down to 75 percent within the stipulated time. Purely a fundamental call thereafter, that also gives you a potential. So maybe the upside will be seen in the stock for the next three months if they are serious in the delisting plan."

"Those who are holding the share can look for a price of Rs 160-170 also. Those who want to play on this idea now can enter into the stock at the current price. Share is ruling at Rs 110, even if you get it at Rs 120-125, I think it is worth playing on this idea and one can look for a near-term target of Rs 140," Tulsian said.

Disclosure: No holding or interests in above stock.