Meghmani Organics may test Rs 34, says Daljeet Singh Kohli

Daljeet Singh Kohli of India Nivesh Securites told CNBC-TV18, "For Meghmani Organics, the last quarter numbers were not so good because they have three divisions – pigment, agro chemicals and basic chemicals. Agro chemicals was not doing good. If you see last quarter, it was down 70 percent year-on-year (Y-o-Y). Whereas, normally Q4 is good for agro chemicals and this time because of this hope of monsoon, it has done better. So, we are feeling that all pigments and chemicals because of China effect, both of them are doing much better than anybody's expectation.""All three divisions are now firing up. The result is that numbers will be fantastic. Last year they had some 5 percent kind of margin. This time, it should be around 7-7.5 percent which will be a big jump in terms of margins. That is the reason why we are expecting sales to grow by only 10-12 percent. But net profit can grow by almost 45 percent which is purely because of margin expansion. In terms of valuation again, it is quite cheap," he said."The other trigger point for Meghmani is the reduction in debt. They had some Rs 500 crore odd of debt last year. They paid some Rs 53 crore. They have given a timeline of how they will reduce this debt. As of FY'16, they have Rs 480 crore of debt, Rs 111 crore will be paid in FY'17 as per management guidance. So, if they do that, then that will also add to the enterprise value. So, we remain very positive on it. As of now, we are maintaining previous target of Rs 34, but post results it will be revised upwards."