Surya Roshni can touch Rs 125: Tulsian

Surya Roshni can touch Rs 125 in the next 6 to 8 months time, says Investment Advisor, SP Tulsian.

Tulsian told CNBC-TV18, "If you go by the Q4 performance, Surya Roshni has posted a PAT of Rs 40 crore in Q4 alone while for whole of FY11 the PAT has been at Rs 67 crore. So the company has posted Rs 27 crore PAT in nine months, while Rs 40 crore alone came in Q4. This is largely due to the expansions in the pipe division."
He further added, "Now the company has become the largest ERW pipe maker with capacity of 5 lakh tonne per annum and the focus of the company has been more on the larger dia. If you see the equity structuring or maybe the sharing pattern of the company in FY11 alone the promoters have raised their stake from 29% to 62% via warrant allotment, warrant conversion as well as by giving an open offer. If you see in the past when the open offer was made by the company at Rs 111 per share they even did not get the desired 20% which has mandatory made by them, they could only be able to mob up about 7% stake from this open offer and that is the reason they are holding now 62% stake in the company."
 
"Apart from that they are still holding 55 lakh warrants which will be converted at Rs 111. Since the market price is ruling at Rs 88-89 and since the 25% has already being paid and considering the intention and the performance of the company it is most likely that promoters will raise their stake, convert this 55 lakh warrant which will make their stake to go up to about 67% in the company."
"If you see the FY11 performance the topline of Rs 2500 core, I am expecting to move to at least Rs 3600 crore in FY12. As I said that in Q4 in spite of the higher interest and depreciation burden they post a top-line and bottom-line, a very healthy top-line and bottom-line. So taking into consideration the PE multiple of 6 and price to book of 0.7, I think this is quite cheap compared to the peers available, which are ruling at a PE multiple of 8 to 10 and price to book of 1 to 1.2. So taking these into consideration the downside is very limited but I think one can expect a price of Rs 125 in the next 6 to 8 months time in the stock."