Moneycontrol
Last Updated : Jan 12, 2018 10:13 AM IST | Source: CNBC-TV18

Buy Sunflag Iron: SP Tulsian

Watch the interview of SP Tulsian of sptulsian.com with Anuj Singhal, Latha Venkatesh & Sonia Shenoy on CNBC-TV18, in which he shared his readings and outlook on fundamentals of market and specific stocks.

CNBC TV18 @moneycontrolcom

Watch the interview of SP Tulsian of sptulsian.com with Anuj Singhal, Latha Venkatesh & Sonia Shenoy on CNBC-TV18, in which he shared his readings and outlook on fundamentals of market and specific stocks.

Below is the verbatim transcript of the interview.

Anuj: You have been recommending some of these metal and steel stocks. Sunflag Iron you had recommended earlier as well, what is the call here now?

A: We are continuing with the theme of steel and we have recommended many of the stocks including Sunflag Iron which was recommended at Rs 41 on July 10 and as recent as at Rs 71 on September 20. Stock has already given a gain of more than 100 percent in this last maybe five or six months post our first recommendation and has met the last target also when we gave a buy call at Rs 71. However, looking at the situation going forward, maybe the H1 number because when we recommended it last, at that time we did not have the H1 number of the company in front of us and Prakash Industries has really surprised us quite well with the numbers which also can be taken as a comparable peer.

If I quickly come on the financial performance, because business model has already been defined for the company, making special steel rolled products which are applied in the automobile, defence, engineering, and so many other industries and sectors where they have the high realisation. However, if I just quickly come on the H1 numbers, the PAT has been at about Rs 51 crore on a comparable period of Rs 40 crore of last year, with EPS at about Rs 2.84 in H1 which was at Rs 3.6 for whole of FY17. That means if you just extrapolate this number, I think one can safely take Rs 7.5 as an EPS for FY18 and maybe closer to Rs 9-10 or maybe Rs 9.5-10 for FY19.

If you take the financial situation of the company, it is virtually a debt free company inspite of huge working capital burden and all that which you rarely see in case of any steel company. Promoter stake is at 50 percent, HNIs are holding about 22-23 percent, market cap is seen quite low at about Rs 1,500 crore, and since I say that it is a debt free company, so market cap and EV is same at Rs 1,500 crore.

So taking all this into account, share now ruling at Rs 84, we are giving a revised target of Rs 100 in next six months or so.
First Published on Jan 12, 2018 09:35 am
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