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Last Updated : Nov 20, 2017 03:56 PM IST | Source: CNBC-TV18

Buy PG Foils: SP Tulsian

In an interview to CNBC-TV18, SP Tulsian of sptulsian.com shared his readings and outlook on market and specific stocks.

CNBC TV18 @moneycontrolcom

In an interview to CNBC-TV18, SP Tulsian of sptulsian.com shared his readings and outlook on market and specific stocks.

Below is the verbatim transcript of the interview.

Q: What is your long term stock recommendation?

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A: Today's stock is PG Foils. They are making aluminium foils which are largely used by the pharmaceutical and food sector. They have the capacity of 11,700 tonne per annum. If you see their clientele list, they have clients like Cipla, Nestle, Bosch, ITC, SKF, Amul, Aurobindo Pharma, all kind of food and pharmaceutical companies. What really excites me about the company is that if you take a FY17 performance of the company, topline was at about Rs 256 crore which includes the treasury income also closer to about Rs 17-18 crore. However, in Q1, the topline is closer at about Rs 121 crore. That means we are seeing an increase of almost 100 percent on topline and that is getting complimented by the PAT also.

In Q1, PAT has been at Rs 7 crore which was at Rs 17.6 crore in FY17; that means almost 50 percent, because the treasury income, the company is having cash and cash equivalent of about Rs 105 crore against the market cap of just Rs 127 crore. That means you have cash per share of about Rs 130 while the share is ruling at Rs 151. So if you really take an EPS of Rs 22 which company has posted for FY17, and they have already posted an EPS of about Rs 8.60 in Q1, and as I said, that the income is all back ended from the treasury operations and the investments, I won’ be surprised to see the company posting an EPS of at least Rs 24-25.

So even if I take that the share is ruling at a P/E of 6, and if I knock of the cash and cash equivalent, it is ruling at a sub P/E of less than 1. As I said, Rs 24-25, if you knock off Rs 130, you get the share at Rs 20 per share. So, taking all this into consideration, with promoter stake of 58 percent, I think the share has a very limited downside from here and extremely upside potential. However, we have given a target of about Rs 182 in next six months or so.

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First Published on Nov 20, 2017 10:15 am
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