Expect Clariant Chemicals to hit Rs 600: Tulsian

SP Tulsian of sptulsian.com told CNBC-TV18, "Clariant Chemicals India's board Tuesday approved the sale of its land at Kolshet, Thane which is about 88 acres. Lot of the real estate developers like Peninsula Land, Lodha and Oberoi Realty have shown interest and the indication for this land parcel is close to about Rs 1500-1600 crore."

He further added, "However if one takes the conservative valuation at about Rs 1200 crore that is the likely valuation. The deal can get concluded may be in next four-six months or so. The company is a leading specialty chemical makers, having presence in pigments, textile and leather chemicals and biocides for paints." "Its financial performance has been very good, Rs 1100 crore top-line for calendar year 2012 where in the EPS was at Rs 38 and cash EPS was Rs 46. What I liked about the company is their distribution policy. The company gave a dividend of Rs 27.50/share for calendar year 2012 on an EPS of Rs 38. This means the distribution policy is very robust at about 80 percent of that," Tulsian said. He further said, "Hence, whenever this land monetisation happens and even if we consider the tax outgo and the dividend distribution tax etc. still the company will be left with a cash of about Rs 750 crore which can again make the company to declare dividend." "In the past also, when they monetized part of their land, special dividend of Rs 40 was given, but this time major portion of the amount, which I am expecting it to be about Rs 700-750 crore, will come in the form of dividend which works out at about Rs 250 per share." "Even after monetizing the land at Thane it will be having three other plants at Roha, Kanchipuram and Cuddalore. All these are doing quite well. So, it will continue to have robust positions. The EPS of Rs 40 can be maintained by the company on an annualized basis, debt free status, net worth of Rs 500 crore of the company of which Rs 250 crore is held in the form of cash and cash equivalent. So, going forward I don't think we have any kind of downside, but the target of Rs 600 at least can be expected in next six months," Tulsian said.