Fresenius Kabi can move to Rs 175, says SP Tulsian

Fresenius Kabi can move to Rs 175, says SP Tulsian, sptulsian.com.

Tulsian told CNBC-TV18, “Fresenius Kabi Oncology is a company largely on the delisting theme. We have seen two or three stocks getting activated in last week or so. One is Thomas Cook that is not on the delisting move, but the stake sells. Second is Saint-Gobain where the delisting moves has been initiated and third is the Chettinad Cement where we have seen good trading interest coming back on the delisting theme.”

He further added, “The delisting theme is getting revived after the SEBI chief couple of days back have said that there will be no relaxation in the public holding norms of 25% which is now at present June 13, because earlier it was speculated that probably this deadline will get extended or relaxed by the SEBI, but nothing is going to happen and because of that the delisting stocks are again seeing the revival of interest and in Fresenius Kabi also you have the promoter stake of close to about 90% and if you take their business profile as name indicates oncology, they are into the cancer research and making API (Advanced Pharmaceutical Ingredients), formulations in the injectable forms and they have their two facilities in India one at Baddi and second is at Kalyani. The company now seems to be on the commercialization stage because we all know that research takes a very long time and the company now seems to be in the commercialization stage and that is getting partly reflected from its results. If you see its FY11 results probably that may not be very exciting, but first nine months the top-line has been at Rs 400 crore with bottom-line of close to about Rs 50 crore which has some extraordinaries also. But going forward the company is going to do quite well.”

“Apart from the working as I said that promoters have 90% stake and the delisting move is almost certain, I don’t think that they will really opt to dilute their stake in the company to 75%. Instead they will prefer to go for the delisting route and that is likely to happen in maybe three-four months time and once we see these kind of news coming on the stock exchanges that the delisting move has been initiated or the promoters have given an intention or their expression to the company for initiating this delisting move, we see the stock start moving up swiftly and goes up maybe by 20-25% in next week or so post that event happening. Again on a price level I don’t think that share can really fall below Rs 120. In the worst case scenario if you see the share price it has not fallen below Rs 120 but if on the hopes of delisting move getting triggered the stock can move to Rs 175.”

Disclosure - I have holding investment in Fresenius Kabi.