Sarda Energy may give 50% returns by next samvat: SP Tulsian

SP Tulsian of sptulsian.com told CNBC-TV18, "If you see Sarda Energy, the things are that I am quite positive on the steel companies and more specially, those who are into the mid-size and making the integrated or maybe the raw material for the various companies or various components. But this is Prakash Industries is an integrated steel player, they are making 3.5 lakh tonne of sponge iron, 2.5 lakh tonne of long products like billets and blooms and bars and all that. But apart from that, they have ferro alloys division with them of 1.5 lakh tonne.""They have 75,000 tonne in their subsidiary, 75,000 tonne in their own company with backup captive power project also of 80 megawatts each in both of the companies, that means 1.5 lakh tonne of ferro alloys with power manufacturing capacity of 160 megawatts which takes care of their entire power requirement." "And just to give you an example, the company is giving the standalone numbers. They do not report the consolidated numbers. For the first quarter, this ferro alloys division of the company has posted an earnings before interest and taxes (EBIT) of Rs 26 crore. That means if just double it, as I said, 75,000 tonne capacity also exists in the subsidiary, they have made an EBIT of about Rs 50 crore from ferro alloys division alone against last year whole of FY16 has shown a negative EBIT of about Rs 4 crore for the company.""The ferro alloys divisions are showing excellent realisation and that is the reason NMDC and MOIL, the two stocks, if you see in this last one month has risen by about 25 percent. This Prakash Industries has posted an EPS of Rs 25 in first quarter standalone. But, that was having an exceptional item because of some arbitration claim having won by them in their favour, but on a standalone operation it is Rs 7.50. Taking all this into consideration and the consolidated numbers, I will not be surprised to see an EPS of at least Rs 40 from the company for FY17 and share now ruling at Rs 260 again qualifies to give you a gain of about 50 percent by next Samvat, " he said.