SP Tulsian sees Tilaknagar Industries and Dalmia Bharat touching Rs 75 and Rs 150 respectively in next six months.
SP Tulsian of sptulsian.com is bullish on Tilaknagar Industries and Dalmia Bharat. He sees these stocks having the potential to yield multi-fold returns going ahead. He has a price target of Rs 75 and Rs 150 on Tilaknagar Industries and Dalmia Bharat respectively in next six months.
Below is the verbatim transcript of his views on CNBC-TV18
On Tilaknagar Industries
The company came out with good numbers on Thursday. Their manufacturing set up have 34 bottling and manufacturing units and 71 distributors with their focus mainly on the southern parts of India. If you go by their FY13 performance, topline of Rs 750 crore and profit after tax (PAT) of close to Rs 60 crore with EBITDA of about Rs 170 crore resulted into an earnings per share (EPS) of Rs 5.
The company has very high equity base of Rs 120 crore but still they have a book value of close to Rs 45 with net worth of about Rs 550 crore plus. If you see the breweries stocks, a company which is having a good presence, you can compare this company with stocks like Radico Khaitan. The brewery stock is ruling at a PE multiple of 12 and even price to book of 1.30-1.35 and the very strong presence.
It is very difficult to penetrate and you hold your leadership in the southern part of India because of the entry barriers, because of government being the distributor in all the four states. Despite that, the company has been consistently improving their performance. Rs 4 was EPS for FY12 which rose to Rs 5 for FY13.
Similar growth will continue for the company in maybe next two-three years with 20-25 percent growth on the topline and bottomline. Going forward, earning call will be Rs 6 EPS which makes the stock rule at a PE multiple of Rs 10. In the past, the stock has moved to a level of Rs 85 and then corrected to the current levels. Due to the positive bias on the breweries stock and strong portfolio of the company into the spirit and Indian Made Foreign Liquor (IMFL) brands, the stock can move to Rs 75 in next six months or so.
On Dalmia Bharat
This company holds 85 percent in Dalmia Cement which has a capacity of nine million tonne. Dalmia Cement which is a subsidiary of the Dalmia Bharat, hold 45 percent in OCL as well. There Q4 numbers cannot be termed as very good but on a year on year (Y-o-Y) basis, the numbers look very good. But, I have taken a call on their whole FY13 numbers where topline has been at Rs 2,800 crore with PAT of close to Rs 190 crore due to low equity base, the company has just an equity base of Rs 16 crore.
The company posted an EPS of close to Rs 23 for FY13 against same being sub Rs 18 for FY12. Considering the total aggregate capacity of about 17 million tonne of the group, taking the capacity of both these companies and the organic and inorganic plans, they have undertaken, the capacity will ramp up to 22-23 million tonne. The advantage of that higher capacity of both the companies is going to flow into this company one on consolidated basis and second profit from the associates being 45 percent stake held in OCL.
Other business model includes the captive power plant minority stake, refractory business which they are outsourcing. If you see the price to book also, share is ruling at 0.35. Amongst the midsized cement companies, this is ruling at a lowest PE multiple of five. The only problem is that being the holding company’s structure, this stock has not been properly analysed and has a very low volume. But whenever the stock comes into focus, it swiftly starts moving up. So, maybe a price of about Rs 150 can be expected for the stock in next six months or so.
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