'Target Rs 1,150 on Voltamp Transformers, Rs 450 on Kesoram Industries'
ET Now caught up with Ashish Kapur, CEO, Invest Shoppe India Ltd., to get his views on Voltamp Transformers.
By 
|
| ET Now caught up with Ashish Kapur, CEO, Invest Shoppe India Ltd., to get his views on Voltamp Transformers.
Why do you like Voltamp Transformers? What is the price target you put on it?
I like this company a lot because after an expanded capacity, it is a clear leader in the transformer industry. Secondly, unlike many other players, it is not over dependent on state electricity boards. Only 20% of its current demand is from SEBs, the rest is from the industrial segments. It has a very prestigious and a good client base including Reliance Industries, L&T, ABB. The company has very strong fundamentals. It has a very low debt, and has very strong cash in its books. After the expanded capacity and also keeping in mind that 11th year plan, there is going to be a tremendous increase in capacity of power plants in India. A lot of huge demand is likely to come in from the new power plants for transformers.
Keeping in mind its existing healthy order book, expanded capacity, changing environment in the power sector and likely huge demand for the T&D business in the coming few quarters, this is one stock which regardless of where the market is has a clear upside of around 30-35% from the current levels. So, we have a target of about Rs 1,150 which discounts its expected FY12 earnings by 10 times and we feel that 10 times is we get given the leadership it enjoys in Indian transformer industry and the favourable demand outlook for this industry.
The other stock which we are recommending is Kesoram Industries which is a company in cement and tyre business. Both these industries, cement and tyre, have seen a very rapid increase in input cost which has resulted in a disappointed result. The stock has already come down a lot. The current price of discounting FY11 expected earnings by only four times and in FY12 it is likely to be more than Rs. 100 EPS by around 3-3.5 times, is very low. Here, we have a target of around Rs 450. And any softening in rubber prices or any softening in input cost for cement can land a further upside to this stock but clearly there is 30-35% left on the table for this stock.
Why do you like Voltamp Transformers? What is the price target you put on it?
I like this company a lot because after an expanded capacity, it is a clear leader in the transformer industry. Secondly, unlike many other players, it is not over dependent on state electricity boards. Only 20% of its current demand is from SEBs, the rest is from the industrial segments. It has a very prestigious and a good client base including Reliance Industries, L&T, ABB. The company has very strong fundamentals. It has a very low debt, and has very strong cash in its books. After the expanded capacity and also keeping in mind that 11th year plan, there is going to be a tremendous increase in capacity of power plants in India. A lot of huge demand is likely to come in from the new power plants for transformers.
Keeping in mind its existing healthy order book, expanded capacity, changing environment in the power sector and likely huge demand for the T&D business in the coming few quarters, this is one stock which regardless of where the market is has a clear upside of around 30-35% from the current levels. So, we have a target of about Rs 1,150 which discounts its expected FY12 earnings by 10 times and we feel that 10 times is we get given the leadership it enjoys in Indian transformer industry and the favourable demand outlook for this industry.
The other stock which we are recommending is Kesoram Industries which is a company in cement and tyre business. Both these industries, cement and tyre, have seen a very rapid increase in input cost which has resulted in a disappointed result. The stock has already come down a lot. The current price of discounting FY11 expected earnings by only four times and in FY12 it is likely to be more than Rs. 100 EPS by around 3-3.5 times, is very low. Here, we have a target of around Rs 450. And any softening in rubber prices or any softening in input cost for cement can land a further upside to this stock but clearly there is 30-35% left on the table for this stock.
Too busy to trade in stocks? Invest in Mutual Funds with ET Money!
Bookmark or read stories offline -
Download ET Markets APP
Download ET Markets APP
ADVERTISEMENT
