First Leasing can test Rs 75, says SP Tulsian

First Leasing Company of India can test Rs 75 in next six months, says SP Tulsian of sptulsian.com.

Tulsian told CNBC-TV18, "First Leasing Company of India has introduced the concept of leasing and hire-purchase maybe about 35-36 years back. If you see the history of the company for the last 36 years they have been uninterruptedly paying the dividend and for FY12 the dividend of the company was at about 18 percent.”
He further added, “For the first half of the current year on the total income of about Rs 125 crore the company earned a PAT of close to Rs 20 crore, which translates into an EPS of about Rs 8.60 paise. This Rs 20 crore PAT has been earned almost equally in both the quarters with the same amount maybe 9.5 in Q1 and about 10.5 in Q2. So you see a consistent growth of maybe about half to one percent every quarter and that can be easily taken as the EPS of about maybe more than Rs 17.17 for FY13.”
“If you go by the present market price the share is ruling at a PE multiple of 3.5 and if you go by the book value also the share is ruling at a price to book of 0.4 because the book value of the company is over 150.”
“So going by the track record and in fact maybe about six months back we had the news that promoters of the company are looking to exit from this business and sell their stake in the company and at that time we have seen the renewed interest coming back into the stock largely on the hopes that this stake sale will happen. But since then we have been seeing profit booking and now the share is ruling or maybe constantly ruling at about Rs 55-60.”
“But purely going on the performance and if you see the track record of all other non banking financial companies (NBFCs), in fact they have seen a good PE expansion and now ruling almost in double digits. I am not comparing this company with them because they are way ahead in terms of the volume, in terms of the operations but even if you take a call on this company from the consistent dividend track record and the performance point of view and looking at its fundamentals as I said ruling at a PE multiple of 3.5 on the current year’s earning and price to book of 0.4 as on the book value of September 30, 2012, I think stock looks quite interesting and one can expect a price of about Rs 75 in next six months or so.” Disclosure: I have no holdings in the above stock.