Expect 40-50 % return in Century Textiles: Tulsian

Expect 40-50 % upside in Century Textiles and Industries, says Investment Advisor, SP Tulsian.

Tulsian told CNBC-TV18, "Century Textiles and Industries is a multi-divisional company. The biggest attraction in the company is 9 million tonne of cement capacity and we have seen that group has been aggressive in consolidating all their cement business in one company. Maybe KM Birla Group will not go ahead for consolidation of the capacity held by his grandfather in the companies like Mangalam Cement, Kesoram and Century but eventually this is going to happen.”

He further added, “All these companies put together have a capacity of close to 20 million tonne of which 9 million is held in the Century textile, so that is a very well profit making company. Apart from that they have 200,000 tonne of paper making plant in Uttaranchal. They have recently started textile plant in Jhagadia near Bharuch in Gujarat which has recently commenced. Apart from that even their Century Rayon at Kalyan has been doing quite well.”

“Overall from the core business, company can alone make a profit of about or an EPS of about close to Rs 40 go for FY11. The balance sheet of the company is also not quite leveraged. It is only sitting on a debt of close to Rs 1000 crore and the management has hinted that they will be going for about 1 million sq feet of development without any equity dilution, without any JV and they are likely to get completed in two years time.”

“The whole mill which was held by the company earlier as Century Mill will be developed mostly in the hospitality and the IT park where they will be getting an FSI of anywhere between 2.5 to 4. So they can easily have a developable area of about 5 million sq feet, which can easily get valued to the extent of Rs 7000-8000 crore. So taking all this into consideration with a market cap of less than Rs 5000 crore with an EV of Rs 6000 crore, I see huge value laying in the books of the company or atleast share at quite under price at Rs 500. So if somebody can buy this share with 12 months target can easily expect 40-50% kind of return."