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SP Tulsian of sptulsian.com has picked Triveni Turbine and JK Lakshmi Cement as his multibaggers for the day.
According to him, Triveni Turbine looks good at the current price. "If somebody can keep a view of about six months, one can expect a price of Rs 65," he adds.
For JK Lakshmi Cement, he has a six-month target of Rs 150.
Houseviews: 4 stocks to watch in today's trade
Below is the edited transcript of his interview with CNBC-TV18's Udayan Mukherjee and Sonia Shenoy.
Q: Why have you picked Triveni Turbine?
A: The company has been created after hiving off the turbine division from Triveni Engineering, which is now a sugar company. The company has 60 percent of the market share, upto 30 MW capacity of turbine. These 30 MW turbines are used in diverse nature of industries and companies catering to almost about 18 industries. They have a good presence, not merely in India. Infact they have global presence. They exports products to about 30 countries.
Going by their fundamentals, they have been a consistent performer. Earlier, when the company used to be a combined entity with sugar, the turbine division used to balance the company with its consistent performance.
They have already declared their Q2 numbers. They posted a top-line of close to about Rs 290 crore in H1. Their EBITDA margin is close to about 25 percent. They are likely to post an EPS of close to about Rs 3 for FY13 because for H1 the EPS is close to about Rs 1.30.
If you go by the shareholding pattern, 75 percent of the shares are held by the promoters and about 19 percent shares are held by the institutional investors. You can place this company into the capital goods space.
One may argue that the PE multiple of 16-17 looks quite stretched, but the company can be compared to companies like Thermax. Thermax has been posting consistent performance.
Taking all this into consideration, the stock looks good at the current price. If somebody can keep a view of about six months, one can expect a price of Rs 65.
Q: What about JK Lakshmi Cement?
A: I have a the positive view on the midsize cement companies, especially those who have their presence in the western and the northern region and have very good profit margin.
The company has presence in three states—Rajasthan, Gujarat and Himachal Pradesh. And in all the three states the realisations are quite good.
If you go by their EBITDA margin for the first half of FY13, on a top-line of Rs 1,025 crore, the company has achieved an EBITDA margin of close to about 23 percent. With EBITDA of Rs 235 crore and PAT of close to Rs 101 crore, it gives an EPS of close to about Rs 8.50 paise. The best part is that PAT of Rs 101 crore has been equally earned by the company in both the quarters; Rs 50 crore in first quarter, Rs 50 crore in the second quarter.
If you go by the recent results of this size of cement companies, for that matter, you can include the large cement companies also, none of them have been able to hold their margins and the bottomline that they have earned in the Q1.
Going forward, since the positive view continues to remain on the cement sector, especially on smaller companies who have a capacity of anywhere between three-four million tonne to as high as eight-nine million tonne. Ten million tonne capacity companies are enjoying different valuations, different margin pictures.
I had earlier picked up Mangalam Cement because that had an EV per tonne of about USD 35. In case of this company, EV per tonne is at about USD 80-85. But, margin is very attractive at 23 percent.
The stock has almost risen about 200 percent. That’s the reason the company has gone for the share buyback also. They have already bought back about 48 lakh shares till last week of October. Infact, the share buyback programme may not continue hereon.
Taking a fundamental call on the company, expectations of an EPS of close to about Rs 20 for whole of FY13, I am continuing to have the positive stance on the sector for next six-eight months. I think the stock looks quite good with a target of Rs 150 in the next six months or so.
According to him, Triveni Turbine looks good at the current price. "If somebody can keep a view of about six months, one can expect a price of Rs 65," he adds.
For JK Lakshmi Cement, he has a six-month target of Rs 150.
Houseviews: 4 stocks to watch in today's trade
Below is the edited transcript of his interview with CNBC-TV18's Udayan Mukherjee and Sonia Shenoy.
Q: Why have you picked Triveni Turbine?
A: The company has been created after hiving off the turbine division from Triveni Engineering, which is now a sugar company. The company has 60 percent of the market share, upto 30 MW capacity of turbine. These 30 MW turbines are used in diverse nature of industries and companies catering to almost about 18 industries. They have a good presence, not merely in India. Infact they have global presence. They exports products to about 30 countries.
Going by their fundamentals, they have been a consistent performer. Earlier, when the company used to be a combined entity with sugar, the turbine division used to balance the company with its consistent performance.
They have already declared their Q2 numbers. They posted a top-line of close to about Rs 290 crore in H1. Their EBITDA margin is close to about 25 percent. They are likely to post an EPS of close to about Rs 3 for FY13 because for H1 the EPS is close to about Rs 1.30.
If you go by the shareholding pattern, 75 percent of the shares are held by the promoters and about 19 percent shares are held by the institutional investors. You can place this company into the capital goods space.
One may argue that the PE multiple of 16-17 looks quite stretched, but the company can be compared to companies like Thermax. Thermax has been posting consistent performance.
Taking all this into consideration, the stock looks good at the current price. If somebody can keep a view of about six months, one can expect a price of Rs 65.
Q: What about JK Lakshmi Cement?
A: I have a the positive view on the midsize cement companies, especially those who have their presence in the western and the northern region and have very good profit margin.
The company has presence in three states—Rajasthan, Gujarat and Himachal Pradesh. And in all the three states the realisations are quite good.
If you go by their EBITDA margin for the first half of FY13, on a top-line of Rs 1,025 crore, the company has achieved an EBITDA margin of close to about 23 percent. With EBITDA of Rs 235 crore and PAT of close to Rs 101 crore, it gives an EPS of close to about Rs 8.50 paise. The best part is that PAT of Rs 101 crore has been equally earned by the company in both the quarters; Rs 50 crore in first quarter, Rs 50 crore in the second quarter.
If you go by the recent results of this size of cement companies, for that matter, you can include the large cement companies also, none of them have been able to hold their margins and the bottomline that they have earned in the Q1.
Going forward, since the positive view continues to remain on the cement sector, especially on smaller companies who have a capacity of anywhere between three-four million tonne to as high as eight-nine million tonne. Ten million tonne capacity companies are enjoying different valuations, different margin pictures.
I had earlier picked up Mangalam Cement because that had an EV per tonne of about USD 35. In case of this company, EV per tonne is at about USD 80-85. But, margin is very attractive at 23 percent.
The stock has almost risen about 200 percent. That’s the reason the company has gone for the share buyback also. They have already bought back about 48 lakh shares till last week of October. Infact, the share buyback programme may not continue hereon.
Taking a fundamental call on the company, expectations of an EPS of close to about Rs 20 for whole of FY13, I am continuing to have the positive stance on the sector for next six-eight months. I think the stock looks quite good with a target of Rs 150 in the next six months or so.