See 100% return in Emco , says Aashish Tater, Head of Research, Fortunewizard.com.
Tater told CNBC-TV18, "Emco could be a big turnaround story from next 18-24 months perspective. Last night the company reported the PAT and reported an EPS of 12 paise. It is better to ignore the financials right now from that angle because the company has not got much order in its kitty right now. But since 2006-07 the company promoters ventured out and bought mines in Indonesia and now with the company balance sheet likely to get reduced because the promoters are looking to sell part of its acquisitions in the Indonesian coal mine."
He further added, "The entire chapter could again change because on a reduced basis the marketcap is roughly around Rs 180 crore with a sales of Rs 800 crore; so very attractive position from debt side. The valuation of the Indonesian coal mine per share works out to be around Rs 78 and the net adjusted value should be somewhere around 55 post debt. Once this particular cash comes in, the company will be able to pay its debt and interestingly with new transmission orders that we are forecasting for the company."
"We feel the company will be on stream to report an EPS of Rs 7 and given that transformer companies roughly trade at 8-10 times these are likely possibility that the stock can even test its level where the price to book right now is around 0.3 times and the book value of the company is Rs 88. But we are suggesting that by the time the company actually starts performing on the bottomline front, the stock could stabilize around Rs 55 levels because of the Indonesian coal asset sale, which should materialize within next 8-12 months and this could be a good bet at current levels given there is hardly any downside."
"Another interesting thing is that the promoter holding last year reported was 38%, now it is roughly around 43 percent through small acquisitions or across quarters the promoters are buying at around Rs 37-38 and right now the price is Rs 30. So you are buying a stock where the promoter itself was acquiring around Rs 38 odd mark and you are acquiring at Rs 30 at 30 percent discount."
"So under any circumstances we feel the promoters would be supporting the stock if the stock goes down from current levels. Second, because of the story of the Indonesian coal mine, the stock has to see a lot of upside from current levels. So given all these factors we feel a part of your portfolio should be allocated from a longer term perspective on the stock for almost 100 percent minimum in Emco from current levels."
Tater told CNBC-TV18, "Emco could be a big turnaround story from next 18-24 months perspective. Last night the company reported the PAT and reported an EPS of 12 paise. It is better to ignore the financials right now from that angle because the company has not got much order in its kitty right now. But since 2006-07 the company promoters ventured out and bought mines in Indonesia and now with the company balance sheet likely to get reduced because the promoters are looking to sell part of its acquisitions in the Indonesian coal mine."
He further added, "The entire chapter could again change because on a reduced basis the marketcap is roughly around Rs 180 crore with a sales of Rs 800 crore; so very attractive position from debt side. The valuation of the Indonesian coal mine per share works out to be around Rs 78 and the net adjusted value should be somewhere around 55 post debt. Once this particular cash comes in, the company will be able to pay its debt and interestingly with new transmission orders that we are forecasting for the company."
"We feel the company will be on stream to report an EPS of Rs 7 and given that transformer companies roughly trade at 8-10 times these are likely possibility that the stock can even test its level where the price to book right now is around 0.3 times and the book value of the company is Rs 88. But we are suggesting that by the time the company actually starts performing on the bottomline front, the stock could stabilize around Rs 55 levels because of the Indonesian coal asset sale, which should materialize within next 8-12 months and this could be a good bet at current levels given there is hardly any downside."
"Another interesting thing is that the promoter holding last year reported was 38%, now it is roughly around 43 percent through small acquisitions or across quarters the promoters are buying at around Rs 37-38 and right now the price is Rs 30. So you are buying a stock where the promoter itself was acquiring around Rs 38 odd mark and you are acquiring at Rs 30 at 30 percent discount."
"So under any circumstances we feel the promoters would be supporting the stock if the stock goes down from current levels. Second, because of the story of the Indonesian coal mine, the stock has to see a lot of upside from current levels. So given all these factors we feel a part of your portfolio should be allocated from a longer term perspective on the stock for almost 100 percent minimum in Emco from current levels."
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