Hind Rectifiers can touch Rs 102, says Aashish Tater, Head of Research, Fort Share Broking.
Tater told CNBC-TV18, "If you see Hind Rectifiers is into a business, which has been actually choppy and that’s why this entire sector has not been able to give or generate returns in this particular space. But now the momentum has shifted to transformer power businesses. Given that this is just a Rs 70 odd crore market cap company with a dividend yield of almost 4-4.5 percent, there is hardly anything to lose at current levels. People, who are feeling missed out, can park some funds in this particular stock itself."
He further added, "They own roughly four plants, two in Dehradun. They are getting operationally to almost 100 percent capacity. The promoters are looking to gather further funds to fund their expansion. It is a low-debt company with almost Rs 10-12 crore of debt. That’s another comfortable position for this particular player in the space."
"If they shift their plant from Bhandup, Mumbai to Dehradun facility, they will get roughly around Rs 70 odd crore in terms of cash flow post tax. That will actually give them momentum to push for further expansion. This will happen in the next 12-18 months. Given this particular fact, the top-line would jump to over Rs 225 crore from the next two years perspective."
"We are roughly working around Rs 140 crore of sales for this year and Rs 167-175 crore for the next year. So, in three years, we feel that the stock would go and stabilise somewhere around Rs 95-102. That’s the range that we feel one should go and book profit because we are working with an EPS of close to Rs 8.5 for this year."
"With the asset actually coming into the balance sheet, in terms of cash, we feel there would be a special income of almost Rs 30 in terms of extraordinary income. That will be used for expansion. We feel the stock should stabilise somewhere around that levels from the next two years perspective. So, it is almost a double from current levels, if someone holds for 24 months." Disclosure: Safe to assume that the above stock has been recommended to clients.
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