Himatsingka Seide can move to Rs 50: SP Tulsian

Himatsingka Seide can move to Rs 50, says SP Tulsian, sptulsian.com.

Tulsian told CNBC-TV18, "Himatsingka Seide is a vertically integrated textile major mainly catering to the home market segments. If you see their business model they have the capacity of processing the 23 million meters fabric per annum, they have 360 weaving machines plus they are making about 32 lakh bed sets per annum. They are catering to the whole of the world and known for the quality.”

He further added, “If you really see their financial performance for first nine months they had a top-line of Rs 1,300 crore with bottom-line of Rs 35 crore and for FY12 they had a bottom-line of about Rs 33 crore. This in my view seems to be a turnaround story where the company is gradually ramping up their operations trying to curtail the debt and improve their profit margins.”

“The EBITDA margins seen for the company for these nine months has been at about 9.5 percent and PAT of Rs 35 crore for nine months has surpassed the FY12 PAT of about Rs 33 crore with EPS for nine months placed at about Rs 3.55.”

“If I go by the FY13 it is likely to post an EPS of Rs 5 plus, but maybe for FY14 the company should be able to report an EPS of close to about Rs 7-7.5 and that makes the stock to rule at a PE multiple of sub-5 times. Even if I go by the book value parameters the stock has a book value of Rs 61-62.”

“So taking all this into consideration the only problem is that one should not expect too much upside in the stock. You need to have 12 months time horizon and the gradual improvement which we are seeing in the financial performance can make the share price to move to about Rs 50 or so."

Disclosure: I have no holding or interest in the stock discussed.