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.
Anuj: You have recommended Sundaram Group stocks in the past, you are positive on Sundaram Brake Linings?
A: That is right, in fact I have Sundaram Brake Linings on September 25 about maybe two weeks back at Rs 533 which has already given 33 percent return just in two weeks. However, because on Friday it was frozen upper circuit, and then at the end it opened, so got a lot of inquiries and we need to remind our viewers that those who have bought earlier and having seen a gain of 33 percent, can still hold it for a further gain for the simple reason, because the fundamentals were already explained that this is a peer group company with Rane Brake Linings. If you see, it has been a turnaround case.
For Q1 FY18, the company posted an EPS of Rs 4.27 which was at Rs 4.50 for whole of FY17. Maybe for the last couple of years company had little problems, but going forward they are likely to sustain this kind of profitability and maybe improve further. For FY19 EPS can be expected at about Rs 22-23, for FY18 also the same kind of pattern is likely to be seen and they are pioneer in manufacturing asbestos free friction material.
So taking all this into consideration, with promoter stake of 66 percent, and market cap is still very low at about sub Rs 300 crore, maybe precisely Rs 280 crore. So taking all this debt free status and the five plants they have, in fact the net present value of that is estimated at about Rs 750 crore. So taking all this into consideration, we still hold our positive view on the stock with a target of Rs 850 in next six months or so.
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