Indus Fila has target of Rs 16, says SP Tulsian, sptulsian.com. The company is having three plants in Karnataka. They have the process house and the weaving unit. They are making fabrics and garments and largely catering to the export market, to the reputed brands and all that.
Indus Fila has target of Rs 16, says SP Tulsian, sptulsian.com.
Tulsian told CNBC-TV18, "Indus Fila is a textile company. If you recall five-six years back they have gone public and since then they have been facing the problem. The company is having three plants, all three are in Karnataka, two in Bangalore and one is close to Bangalore and it is an integrated company. They have the process house and the weaving unit. They are making fabrics and garments and largely catering to the export market, to the reputed brands and all that. "
He further added, "Up to FY11 the company was making losses but since FY12 it has turned around and it is making profits. Infact for whole of FY12 they had an EPS of Rs 3.15. They have very low equity base of about Rs 20 crore and if I go by the first half performance again the top line is close to about Rs 200 crore plus on which the PAT is close to about Rs 2 crore. But cash profit has been close to about Rs 8 crore. So again going by the same performance and considering the FY12 performance I am expecting that even FY13 should be having an EPS of Rs 3 plus and while the cash EPS may be close to about Rs 6 plus."
"If you go by the present discounting given to the textile companies they are generally between four to five times. So one may say that the share is probably ruling at its optimum value but I am not expecting that because the turnaround cases are always enjoying a higher valuation, the present market cap is very low. Infact one can place this company into the micro cap because the market cap is sub Rs 25 crore."
"And even if I take the debt of the company which is to the extent of Rs 200 crore, half for the working capital, half for the fixed assets, I think on valuation front also it looks quite low. So considering the textile stocks are again now in focus and we have been seeing the small textile stocks again going up and this company largely caters to the export markets. So may be weak rupee or currency is to their advantage."
"So taking all this into consideration because generally if you can take a longer time horizon of may be one year or so one can expect a gain of close to about Rs 40. So that’s the reason I have recommended Indus Fila with a price target of Rs 16 in next one year or so."
Disclosure: No holdings in above stock.