Uncover the potential of active and passive investing on 6th October at 4pm. Register Now!
Last Updated : Jan 31, 2012 10:44 AM IST | Source: CNBC-TV18

Bannariamman Sugars can test Rs 750: Tulsian

Bannariamman Sugars can test Rs 750 in six months, says SP Tulsian, sptulsian.com.

Bannariamman Sugars can test Rs 750 in six months, says SP Tulsian, sptulsian.com.

Tulsian told CNBC-TV18, "There are a lot of controversies with respect to sugar stocks; we have even seen very poor results from Balrampur Chini and EED Parry, but some good numbers coming out of Ponni Sugars. So again there is a mixed outcome or mixed reflection of the results even from the south based company."

He further added, "I find Bannariamman Sugars quite interesting. This is again south based and is an integrated sugar mill. They have total four sugar mills, two of which are in Karnataka and two in Tamil Nadu. The total aggregate capacity is 19,000 TCD, their distillery capacity is about 127 KLPD and they have the cogeneration facility of close to about 85 megawatts."

"If you see the advantages, the mills which are operating in Karnataka presently have a recovery of 12% plus while the mills operating in Tamil Nadu have working of 250 plus days. So both these states have their own advantages. Apart from that, if you see the sugarcane prices in both the states, they are not really very high like sugarcane prices prevailing in UP."

"The EPS for FY11 for the company was at about Rs 48 while the cash EPS was at Rs 108. The same kind of performance is going to get repeated by the company for this year as well. In fact I am expecting EPS to cross about Rs 52-53 for FY12 with a cash EPS of close to about Rs 110. Even if you take the book value of the share at about Rs 650, it is available at 0.9 times of the book value."

"If you see the debt in the books of the company, it is close to about Rs 500 crore. However, it is backed by working capital largely because of the inventory and other current assets, which have a net current asset value of close to Rs 600 crore. Apart from that, the company is into the granite processing and they have the windmill of 9 megawatts, but I am not giving too much valuation for all these things."

"Sometimes you see very low volume in the stocks but once it comes on the focus either because of the good working or because of the strong fundamentals, the stock starts running up in a very significant way. So considering that, I am expecting that the share can move to Rs 750 in six months and one can expect a price of Rs 1000 in next 12 months or so."

First Published on Jan 31, 2012 10:39 am