Gujarat Fluoro a long term bet, says Aashish Tater

Gujarat Fluoro is a long term bet, says Aashish Tater, Head of Research, Fort Share Broking.

Tater told CNBC-TV18, “Last time when we discussed Gujarat Fluoro around at Rs 320-330, levels we had a target of close to Rs 600 from 18 months perspective and now again the stock has tanked from that Rs 540 odd mark to Rs 400 and we feel this is the right time to go and grab the stock from a longer term perspective.”

He further added, “The Company announced that it will go on a phase capacity expansion by two and half times in next three years. For this year the company will end up with a top-line of around Rs 2,100 crore odd. For next year we are working with a number of close to Rs 2,680 crore odd. On next year Rs 2,680 crore odd of top-line the company will end up an EPS of Rs 97. A company which has a monopolistic business, a model like Gujarat Fluoro where a large part is free cash flow we feel this is a definite candidate that should be a portfolio bet from a longer term perspective. Commenting on technical trends and the sideways movement on stocks, there are list of stocks which get punished or their PE get shrink because of market sentiment rather than any problem into the stock. So what happens is when the prices are actually falling, that’s the time when you should be buying the stock and when there is bullish sentiment that’s the time when you should be exiting the stock?”

“This is another proxy where we feel every time it goes and tests its quartile price earning multiple that’s Q1, the stock will show a definitive bounce back. So now we are playing on the downside for a range of around at Rs 390-410 and on upside to a tune of Rs 600 from next six to eight months perspective. But yes, if someone has a potential to hold it for two-two and half years whenever market sentiments will improve on an EPS of Rs 97-98 for next year and Rs 112-115 a year after we feel there will be lot of return that can be generated from this particular stock. But one should have patience and a longer term timeframe on the stock.”