Expect 50% upside in Vardhman Textiles: Rajen Shah

Rajen Shah of Angel Stock Broking told CNBC-TV18, "Weak rupee is going to benefit textile industry. We like Vardhman Textiles in that space. We had recommended this stock when it was at Rs 230 and it has given about 40 percent return from that level. We do expect another 50 percent upside. The stock is quoting at Rs 350 and we have a target of Rs 500."

He further added, "This is Rs 5000 crore turnover company having 22 manufacturing plants, one million spindles and huge manufacturing capacity. So, a weak rupee will help the company significantly because the net forex it earns about Rs 800 crore. It recently also set up a new unit at Budhni, where it spent almost Rs 1000 crore for processing, weaving and spinning - that impact will also add significantly to the company's turnover and bottomline in the current year," he added.
"According to the MD of the company, the profit in the current year will be much higher than profit of 2010-11, when the company had reported Rs 80 earnings. So, we feel the EPS could go to Rs 85. The stock is at Rs 350, so hardly four times for India's number one integrated textile company is cheap. Companies like these should deserve at least 8 times. So, even if we give it 6 times then 50 percent upside in the stock price cannot be ruled out in next 12-18 months," Shah said.