Schneider Electric can touch Rs 125: SP Tulsian

One can expect Rs 125 in Schneider Electric Infrastructure in the next 6 months, says SP Tulsian, sptulsian.com.

Tulsian told CNBC-TV18, "Schneider Electric Infrastructure came into existence because of the hiving of the distribution business from Areva T&D, which is now named as Alstom T&D and if you see this company they are the market leader in energy efficiency improvement domain and they are providing to the energy infrastructure sector largely to the oil companies, power plants, energy intensive industries."

He further added, "The focus of the company or maybe the profitability or the performance of this distribution division was never taken on a standalone basis because of the combined financials posted by the Areva T&D, but now since that has been hived off and now this has got listed with the focus business model."

"The company’s first 9 months performance has been quite good. The company posted topline of close to Rs 1,030 crore of which the PAT has been at Rs 33 crore for 9 months. If you see in Q3 the PAT has been at Rs 18 crore that means in first half PAT was Rs 15 crore, in the Q3 it is at Rs 18 crore."

"If you see the shareholding pattern, Alstom is holding 73.5% stake and the idea of hiving off this transmission and distribution business into two companies was that Alstom’s focus lies more on the transmission and they are not interested in distribution and there has been talk that probably sooner or later the Alstom may look to exit from the distribution business."

"We have seen that the promoter holding in this company Schneider held by four entities of the promoter group have been transferred via block deal into one single company that did not trigger any open offer because it was within the group itself. So that probably indicates that the preparations have all been made to pull the entire shareholding of the promoter of 73.5% in one company. If that sale happens, it is again estimated that probably it is likely to happen at a very hefty valuation, which is talked maybe at about Rs 145-150 because the kind of valuation given to these companies are at least 2-2.5 times of it’s top line, which is estimated to be at Rs 1500 crore."

"But suppose even if the sale does not happen, with the focus of the company now purely on the distribution the improvement is likely to get improve further in the time to come maybe in the next one year or so and purely on fundamentals also, I am not playing too much on the stake sale or the Alstom exiting from the company. But on pure fundamentals also this is a safe and steady stock where one can expect of Rs 125 in the next 6 months or so."