G Chokkalingam, Founder & MD at Equinomics Research & Advisory feels that KCP Sugar may move to Rs 46.
G Chokkalingam, Founder & MD at Equinomics Research & Advisory told CNBC-TV18, "In KCP Sugar we successfully made money and it went to Rs 46 recently. Now again it has corrected back to around Rs 33-34 level. This is one of the most efficient sugar companies in the country in terms of quality of management efficiency of sugar recovery and balance sheet. Out of 14 years, 13 years it has paid dividend consistently. That is very rare in the sugar industry because it is highly cyclical."
"Second, least leveraged, the borrowed fund is only around 20-22 percent of the total capital employed. Third, it has got a lot of long-term triggers. It has got a lot of land bank in Chennai, it has got a lot of residential properties in Andhra. The company has acknowledged in the annual report about these properties in Andhra, so I firmly believe that as and when they unlock the value this can become even a multi-bagger. Otherwise, conservatively it should give somewhere around Rs 46 return; target price I meant."
"Also, very interesting point is that despite a good monsoon the sugarcane sowing has come down by almost around 7-8 percent now which means that the sugar output which will come into 2017 also will be down significantly. So, that would be positive for efficient sugar companies like KCP Sugar," he said.The Great Diwali Discount!
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First Published on Sep 29, 2016 02:28 pm