CESC can touch Rs 360: SP Tulsian

CESC can touch Rs 360, says SP Tulsian, sptulsian.com.

Tulsian told CNBC-TV18, "Because of acquisition of FirstSource Solutions Ltd (FSL) I think CESC has taken a beating and we have seen good shorts getting built up. Even the investors those who have been loyal investors in the company seem to have moved out of the stock. If you really see the bottoming process at that time when it was discussed I had taken a call that it can fall to about Rs 300, but it corrected to as low as Rs 270-275 and it remained at those levels Rs 280-285 for quite sometime."
He further added, "Now that short covering, the under-ownership has all seen to be a big trigger for the stock to move up coupled with the fundamentals as well. If I take a fundamental view on the stock I think I like the core business of the company because they are the integrated power producers and about 1,200 MW plus capacity with four operational plants and 50 percent of the coal requirement is met from their own captive mines. Apart from that they have their transmission, distribution network also, plus they are distributing the power to about 25 lakh customers in Calcutta and Howrah."
"For first half on a top-line of Rs 2,800 crore the company earned a net profit of about Rs 260 crore resulting into an EPS of close to about Rs 21 per share. If you go by the recent statement of the management having given that they are looking to hive off their retail business into a separate company and maybe looking for its listing as a separate company or maybe looking to induct a PE investor in that company. So whatever restructuring happens in any form, I think that will also be seen a big value accretion for the stock price on a consolidated basis or on a sum-of-part basis, because management has realized that they are not getting the potential of their retail business."
"If you really see the retail performance I think they have been ahead of the industry and of their peers, only if you take their standalone retail operations and all that. So taking into consideration management has realized that probably the FSL acquisition has not really gone well with the investors of the company and maybe the hiving off of the retail can really start giving some value."
"But as I said that Rs 21 EPS for first half and even if you make a simple math it gives you an EPS of close to about Rs 42 for whole of FY13 and apart from that the interesting part is that company is setting up two plants of 600 MW each, one in Chandrapur and one in Haldia and both will be operational maybe in next 12-15 months or so. So eventually the power generation capacity will move to 2425 MW that will also be seen a big trigger going forward."
"If you go by the debt positions as on 30th September, the company had a debt of close to about Rs 1,200 crore. So I do not think that overall things are really very bad at this price. If somebody can maybe keep a longer term view, I am not giving a short-term view of 5-6 months, but if keep a view of about one year they can look to a price of Rs 360." Disclosure: I have no holdings in the above stocks.