According to Aashish Tater, Head of Research at Fortunewizard.com, if the M&A deal happens with Pernod Ricard India for high end spirits then Tilaknagar Industries may move to Rs 120-140.
Aashish Tater, Head of Research at Fortunewizard.com told CNBC-TV18, "Tilaknagar Industries has been a favourite right from when United Spirits was identified around at Rs 500 mark. We feel Tilaknagar Industries is next into the merger and acquisition deal pipeline."
He further added, "If we see how the company has shaped up in last 15 months period, the stock was at Rs 34 when we identified it for a target of Rs 70. Again it corrected to Rs 54 level and it made a high of Rs 85 and now it is available at Rs 54-55."
"This time their first strategic tie-up with Pernod Ricard India for high end spirits is going to materialize in some kind of M&A deal. If that happens the stock is worth even Rs 120-140 the way the enterprise value to sales is available for companies globally," Tater said.
He further said, "For every rupee revenue you do in this particular space you get a market cap of four times or say enterprise value of 4.5 times. So on a sale of over Rs 650 crore with a high end spirit that will compensate almost Rs 150 crore over next two years. We feel this is a piece of cake at current levels and identify a company with having Mansion House as one of its brands which is highly recognizable. Tilaknagar has now expanded to eastern region as well as northern region, so combining all these factors we feel the next year EPS will be Rs 7-7.5 from current Rs 4.25."
Disclosure: Safe to assume that the stock discussed have been recommended to clients. No personal positions.
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