Expect 25% return in Excel Industries: Tulsian

Expect 25% return in Excel Industries, says SP Tulsian, sptulsian.com.

Tulsian told CNBC-TV18, "Excel Industries is a company promoted by Shroff family who control Excel Crop and United Phosphorus. The company manufactures agro, water treatment and mining chemicals. Apart from that, they are also making pharma intermediates and other derivatives used in the similar industry. The company came out with their quarter 2 results on Wednesday."

He further added, "For the first half they have posted an EPS of about Rs 9. They have developed real estate at Jogeshwari, so part of that income has been reflected in Q2. But one knocks that off, the company is in a position to post an EPS of about Rs 13. As a part of redevelopment of Jogeshwari plot located in western suburbs of Mumbai, they have retained 41% of developed property. The value of this property is estimated to be at Rs 60-65 crore."

"If we consider other investments made by the company in listed stocks, the total value comes to about Rs 70-80 crore. Their market cap is around Rs 75 crore. Talking about the debt position, on a net of working capital basis if one knocks off current net assets from borrowings it stands at about Rs 50 crore. So, it can be termed as a debt free company."

"The potential seen in mining chemical and agro chemical space in which the company has prominent position gets reflected, with a top line of about Rs 300 crore achieved on an annual basis. With three plants located in Gujarat and Maharashtra, they are likely to remain on a sound footing."

"The share is ruling at a PE multiple of 5 price to book of 0.6-0.7. Other real estates are also having a good value. Taking all this into consideration, this looks to be a steady and good stock. One can expect a return of 25% on an annualized basis over next two-three years if bought at the current price of Rs 68."

Disclosure: I have no personal holding in the above stock.