Wockhardt may settle around Rs 1300-1350: SP Tulsian

SP Tulsian of sptulsian.com told CNBC-TV18, “I will use this fall- as a buying opportunity because Wockhardt has a topline of USD 1 million and management has hinted that USD 100 million will take a hit because of Aurangabad injectable unit not able to export to the US market and if one takes the overall EBITDA margin of 37 percent for the company on an annualised basis for FY13 and the higher EBITDA margin of 45 percent for this hit, which they will be taking on USD 100 million topline. So, the earnings per share (EPS) of Rs 155 even if I take a conservative or on the lower side, EPS is going to fall to Rs 125 if I presume that for FY14.”

He further added, “One cannot make the stock to correct beyond this because the share is now ruling at a PE multiple of less than eight, but some may argue that things may get extended to the other products of the company also and US market, which is giving about 35 percent to the total topline will take a hit and the company is going to go into the dumps again, but I am not seeing that possibility happening because the management has also said that they will be appointing a consultant to retrace these grievances and I am not expecting this USD 100 million turnover to get restored maybe in the next 6-12 months, but the damage is likely to get restricted there because generally in this stock for the last six months, small investors have been trading within a range of Rs 1,600 to Rs 2,100 and they have been getting good money of Rs 100-150. So, they found this stock to be quite interesting and many of them holding the small quantity looks to be now exiting from the stock and that seems to be the main reason. Therefore, I will not be taking a negative view from hereon and maybe in next week to ten days things should settle down for the stock and can move back to a level of Rs 1,300-1,350 or so.”