Hindustan Dorr-Oliver may test Rs 50, says SP Tulsian

Hindustan Dorr-Oliver may test Rs 50 in next six months, says SP Tulsian, sptulsian.com.

Tulsian told CNBC-TV18, “We have seen all three of the IVRCL Group Companies having declared their results. Hindustan Dorr Oliver, IVRCL Assets and Holdings which is eventually getting merged into IVRCL and third is the IVRCL Ltd. I think we have already discussed quite a lot of on IVRCL, pathetic results. IVRCL Assets and Holdings has shown some improvement, though they have posted a net loss of about Rs 100 crore for Q4 but that has shown a declining trend of losses, maybe because of the improvement in the efficiency or maybe realizations of some of their real estate assets.”
He further added, “Hindustan Dorr Oliver have posted very good results. If you see the annual top-line of the company of about Rs 800 crore for FY12 they have achieved about 40% of that in the Q4 itself and when the profitability of the EPS of about Rs 3, the PAT of about Rs 21 crore which they have posted for whole of FY12, 45% of that has been derived in Q4. If you see on a YoY basis there is 200% improvement in the EBIT margin of the company. I don’t think that there are any disappointments whether you take on the EBIT margin fronts or the financials fronts of the company. So probably maybe the Hindustan Dorr Oliver is coming back on the track. It’s an industrial EPC company making many of the industrial EPC products also. They are not merely an EPC contractor; they do make the products also, again diverse applications in the industries. The trigger for the stock has been there for the stake sell and if you recall maybe last month we have seen the stock moving to about Rs 53-54 which used to languish at about Rs 35-40 level. So the volatility or the kind of upsurge the stock shows on the news is again likely.”
“I am expecting that the stake sell because of the poor numbers of IVRCL, definitely management of the company will try to mobilize some of the money. Since IVRCL is holding about 55% stake right now the market cap is Rs 250 crore. But if you take a valuation at which the stake sell can happen at about Rs 60-70, they can realize Rs 300-400 crore which is very much required by IVRCL. So taking all this into consideration especially on the focus on the Q4 results and the expected top-line of Rs 13,000 crore for FY13 and maybe with an EPS of close to Rs 4, I don’t think that stock looks really very expensive. If someone can keep a view of about six months or so, they can expect a price of Rs 50 for the stock.” Disclosure: I have no holding or interest in the stocks discussed.