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Last Updated : Nov 16, 2015 12:19 PM IST | Source: CNBC-TV18

Salzer Electronics may test Rs 300, says SP Tulsian

SP Tulsian of sptulsian.com feels that Salzer Electronics may test Rs 300 in next six months.

SP Tulsian of sptulsian.com told CNBC-TV18, "I like Salzer Electronics. They are customised electrical solution provider in switchgears, wires and cable. They are the largest makers of CAM Operated Rotary Switches with 25 percent market share. Now let me just give you a quick background. Larsen & Toubro (L&T) was holding 25 percent stake in the company for ages. However, they exited, they completely divested their stake in this last six months and may be because of that the stock has corrected."

"If I just go by their Q2 numbers in fact I have combined their Q2 numbers with Q1 because even Q1 was on an uptrend. So, if I just take their H1 margin I am referring the operating margin that has risen by about 150 basis points. That means it was closer to 10 percent for whole of FY15. However, H1 has given a margin of 11.5 percent and that has resulted straight way I come on the earnings per share (EPS), H1 EPS close to about Rs 8.50 which was sub Rs 12 for whole of FY15. Company has reduced their debt also by coming out with qualified institutional placement (QIP) issue also of 26 lakh share at Rs 235. Now share is ruling below the QIP price."

"Taking all these and if you take the debt of closer to about Rs 80 crore which are largely for the working capital against the net worth of Rs 190 crore in fact I will call this company has a debt free. However, taking all this into consideration and the strong distribution network; they do have their own distribution network exporting to 40 countries. Apart from that they are distributing through 350 distributors of L&T also. So, I think that stock has bottomed out and Q2 numbers which are at least I am very much impressed. I think that in this stock one can see a price of Rs 300 in next six months. From here on this downside is very limited. In fact I would say it is minimal, I don’t think that even it will fall five percent from here," he added.



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First Published on Nov 16, 2015 12:14 pm
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