Apcotex Industries can move to Rs 300: SP Tulsian

SP Tulsian of sptulsian.com feels Apcotex Industries can move to about Rs 300 in next six months. He expects the company should be able to post an EPS of close to about Rs 30 for FY14.

Tulsian told CNBC-TV18, "Apcotex Industries has been hived off from the Asian Paints and they are makers of the synthetic latex which is used in the paper, construction, rubber and so many other applications. They are making synthetic rubber also which is used in footwear, tyre and other rubber products."
He further added, "If you see their performance which they have released yesterday, I am taking full year for FY13, they posted an EPS of close to Rs 24.7 on the topline of close to about Rs 400 crore. The growth on the bottomline has not been much, it is about 10 percent, but going forward the kind of traction which we have been seeing in the margin and the application of the synthetic latex mainly into the paper and paint industry and both the industries are doing quite well, so that is definitely going to see the margin getting improved."
"If you see the company having declared a 90 percent dividend for this FY13 that means dividend payout ratio is at about 45 percent of the EPS of Rs 24.9. If you really see the shareholding pattern it is very respectable, a respectable promoter holding. PE is close to about 10. With this kind of pedigree you definitely find the stock quite undervalued."
"The plant which they have at Taloja is really very modern plant where the capacity expansion can also happen and taking all this into consideration maybe price-to-book also at 1.65 with dividend yield of close to about 4 percent on the 90 percent dividend, which the company has declared, if you buy the share now you are going to get this Rs 9 dividend also. The company has been consistently raising the dividend, which was last year at 70 percent with EPS being at Rs 22."
"So I am expecting that company should be able to post an EPS of close to about Rs 30 for FY14. That can make the stock to move to about Rs 300 in next six months, even if I presume the constant PE multiple of Rs 10 which is now getting applied to the stock remains the same." Disclosure: I do not have holdings or interest in the stock discussed.