SP Tulsian of sptulsian.com advises buying Munjal Showa with a target of Rs 240 in next six months.
SP Tulsian of sptulsian.com told CNBC-TV18, "Munjal Showa is one of the leading manufacturer of shock absorbers and this company is in a technical and financial collaboration with Showa of Japan. Munjal’s are holding 39 percent and 26 percent is held by Showa of Japan i.e. 65 percent is held by them and because of the technical financial collaboration of Showa, company is not only supplying in India but they are supplying in the developed market as well like UK, US and Japan."
"If you see the performance, one can call it that the performance has been flat for H1, I am not taking Q1 and Q2 separately, H1 it has been flat. However, that has made the stock also to correct from maybe level of Rs 230-240 to a level of Rs 180. If I go by the financial performance on a topline of Rs 1,500 crore with a cash, it is a debt free company and cash per share is closer to about Rs 25 per share."
"I am expecting if I just simply extrapolate Rs 8 plus EPS, H2 will be better. Maybe FY16 EPS will be closer to about Rs 17 while FY17 EPS can be Rs 20-21. They have three manufacturing plants, so taking all this into consideration the downside is very limited," he added.
"If you knock off the Rs 25 cash from Rs 180 that means effectively Rs 155 and if I say Rs 17 is the EPS you are getting share at a PE multiple of closer to 9, that is very low. It is like a giant sector company with multinational promoters with again a leading promoter of India in the automobile space. So, taking all this into account I think the stock is an ideal buy. I have been maintaining my auto ancillary positive bias and recommended many of the stocks from that space, so maybe taking that Q1 can invest with a target of Rs 240 in next six months," he said.The Great Diwali Discount!
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First Published on Nov 20, 2015 11:18 am