Expect 60% gain in Harita Seating, target Rs 400: Tulsian

SP Tulsian of sptulsian.com told CNBC-TV18, "Harita Seating Systems is a TVS Group company and they provide seating solutions. In fact, they are providing seats to all passenger vehicles, buses, trucks and tractors. There are only two listed companies, Bharat Seats and Harita Seatings, the prominent player I am talking in the listed one. Bharat Seats largely cater to the Maruti-owned vehicles. But Harita Seating have five plants pan-India.""The company declared their Q2 numbers, they have sold one of their plants in Himachal Pradesh on which they were losing money. In Q2 of FY16, they incurred a loss of Rs 36 lakhs which were declared yesterday, . So, by selling this unit on a slump basis, the company made a gain of Rs 4.5 crore. If it is a loss making, let me get out of that, Rs 4.5 crore is the gain. They may have realised may be Rs 5 crore as an investment cost, so, they may have realised Rs 8-10 crore and have curtailed the losses also about Rs 1-1.5 crore," he said. "If I go by the working of the company, it is a Rs 300 crore topline company and if you see the normal earnings per share (EPS) for H1, it is about Rs 7 though it is closer to Rs 10, including that exceptional income of Rs 4.5 crore.""Harita Seating has 51 percent subsidiary with a German Company Harita Fehrer which is providing the polyurethane solutions to the automobile industry. Polyurethane is a very positive or is the critical thing where you have the sturdiness, you replace the metal parts with the polymer and you have the light weight also. The company also has a topline of Rs 300 crore. That means topline of Rs 600 crore TVS Group Company is available to you at a market cap of Rs 200 crore, no debt, five plants, and probably they may go for one more plant since they have exited in Himachal Pradesh. About 69 percent stake is held by promoters," he added."On a standalone basis of this company add maybe about Rs 5-6 EPS of 50 percent because that is also very profitable company, Harita Fehrer which I said as a polyurethane providing this one. The company will have an EPS of closer to Rs 18-20. Yesterday, they have declared 25 percent dividend also.""Harita Seating is the holding company of Harita Fehrer. It is having five plants independently providing the seats to buses and all that. It is the holding company of Harita Fehrer holding 51 percent; Rs 14 EPS will come from the Harita Seating standalone operation add may be Rs 6 being 50 percent because I am presuming Rs 11-12 as that has been the EPS of that subsidiary for FY15.""It is a very small company and debt-free. So I see tremendous growth potential going forward. And may be a price of Rs 400 can be expected in the next six months or so which is giving you roughly about may be 60 percent of the gain from here on in six months," he added.He further said, "May be in two to three years, this can be a multi bagger because this has not come in the limelight. In spite of such a big run up, because the strategic decisions of the management have been very swift and practical, they have exited from the Himachal Pradesh plant and have curtailed the losses of Rs 1 crore on an annualised basis plus realising the amount of about Rs 8-10 crore."