KCP Sugar may test Rs 40 in 1 year: SP Tulsian

SP Tulsian of sptulsian.com told CNBC-TV18, "All the sugar companies have debt but that is for the largely for financing the working capital because they carry the inventory and more during the off season they have to carry this inventory. KCP Sugar had a debt of only Rs 50 crore and net worth of Rs 210 crore and if you see the business model they don't have co-generation plants. They only have distillery and sugar." "If you see the recent monsoon which we have seen in Tamil Nadu and Andhra Pradesh and Telangana, in fact that will give the higher yield and better recovery because sugar if you have the rains and the sugar crushing season has just started which will last till end of May, so all these things are quite positive. If you see the kind of frenzy probable in this run up of the sugar mills, we have not seen this stock participate. On the Q2 numbers of all the sugar mills, they have shown is a recovery or the reversal of the stock inventory loses which they have booked in Q1. Because of that this Q2 results of this company was also very good. I am not going merely on the Q2 because then that will be falsie to Q1 loss separately and Q2 as a very bumper results. If you see the present realisation of Rs 28 per kg for the sugar, that is in the southern states, the rate prevailing at, I don't think that now there are losses or any kind of worry. You have your distillery generalisation as your extra super profits. So taking all this in to consideration KCP is a consistent performer," he said. "About a decade back when the bull run has come, probably this was the best performing stock. Apart from that they have the huge real estates in many part of the country. Taking all this into consideration I think the stock has potential to move to Rs 40 in one year."