Enter India Nippon Electricals: SP Tulsian

Enter India Nippon Electricals, says SP Tulsian, sptulsian.com.

Tulsian told CNBC-TV18, "India Nippon Electricals is a joint venture company of Lucas and one of the Hitachi Group Company where the promoter stake is 66% with 46% held by the Indian promoter and 20% by this Japanese Hitachi Group Company."

He further added, "The company is making electronic ignition system for the two wheelers and three wheelers as well as for the portable engines and their client lists are all whether you talk of Bajaj Auto, Hero Motocorp, Honda, TVS,Crompton Greaves, Piaggio. They have a very good clientele list."

"The first quarter results which have been posted by the company has shown a marginal improvement of close to about 12-13% increase in the PAT with the increase of about 10% in the topline. So I am expecting that the financial performance, which was repeated by the company for FY12 wherein the topline was at about Rs 260 crore with EPS of close to about Rs 28 are likely to see a rise of about maybe 13-15% on the bottomline with topline coming at about Rs 300 crore."

"If you just take a call on the EPS for FY13 it is likely to be close to about Rs 32 per share and last year the company has given a bonus also of two shares for every five shares held and Rs 28 which I have referred for FY12 has been on the enlarged equity and the dividend payout ratio has been very good by the company. They declared 90% dividend for FY12 that results into a yield of close to about 5% based on the current share price."

"Going forward I think the same dividend payout ratio is likely to get maintained by the company, maybe close to about 30% and the yield should remain close to about 5% going forward. Yesterday we have seen some block deals happening on the counter that maybe just to accommodate or maybe because of the huge quantity getting sold the share has slightly corrected and I think that this correction should be used as an entry point wherein I expect a price of about Rs 225 for the stock in next 12 months or so."

Disclosure: I have no holdings in the above stock.