Buy Hanung Toys; target of Rs 200: SP Tulsian

SP Tulsian of sptulsian.com is of the view that one can buy Hanung Toys and Textiles with a target of Rs 200 in the next six-eight months.

Tulsian told CNBC-TV18, "Hanung Toys has taken a lot of beating mainly because of so many reasons. About 3-4 months back it was expected that the company will be issuing bonus 1:1 that did not come. Then there was a news that company will be coming out with the GDR issue even that has been postponed. There have been all kinds of problems which has not been able to satisfy the investors. Since then the stock has been correcting. It touched a high of Rs 400 plus and now corrected to about Rs 125 just maybe a couple of days back."

Going by fundamentals, they are into the toys, home furnishing and textile making and the financial performance of the company has been quite reasonable. The company has been able to post an EPS of Rs 48 so that results into a price to earning multiple of close to about Rs 3 on the historic earnings.

Its price to book multiple is ruling at 0.7. I do not think that this sentiment can really go negative from hereon and yesterday we have been buying into the stock with huge volume. Majority of that volume has translated into the delivery also though we see good quantity getting as trading volume. At a lower level of about Rs 130 now the share is ruling at Rs 142-143. The valuation seems to be hitting the bottom of the valuation level and now the renewed buying interest is coming back.

I am quite optimistic on the stock that going forward they are going to experience a growth of about 20-22% for FY12 and that should translate in to an EPS of close to about 60. Even if you keep your PE multiples stagnant at about 3-3.5 share has the potential to move to about Rs 200 in the next 6 to 8 months time.

While I do not see much downside risk from hereon because looking into the company