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Gujarat Ambuja looks good: Tulsian


Gujarat Ambuja Exports looks interesting at these levels, says SP Tulsian of sptulsian.com.
Tulsian told CNBC-TV18, "We don’t often hear about Gujarat Ambuja Exports. But this is an interesting company, they have about 13-14 plant, they are into the maize processing, solvent extraction, flour mills, they have presence in Madhya Pradesh, Gujarat and Maharashtra. But their major presence is in Ahmedabad with about 10-11 plant. Also, they have the cotton yarn, they have 73,000 spindles."
He further added, "If you go by their Q3 performance, they have posted a top-line of about Rs 650 crore, while the topline for first half was Rs 650 crore. Even the earnings have been quite good in the Q3 with EPS of close to about Rs 2 to 2.10. But if you go by the cotton yarn industry, they have been making very good money and the company has presence in Gujarat where you have good cultivation of cotton. They have the advantage of acquiring the cotton on a longer-term basis."
"They have always been prudent in having their better inventory management in respect to the raw material as well as in respect to the selling. So, taking a positive call on the cotton yarn because as I said they have 73,000 spindles that is going to give them a very robust performance."
"As I said Rs 650 crore turnover came in Q3, but even if I don’t extrapolate the same the company should be able to post a top-line of close to about Rs 2,000-2,100 crore for entire FY11 because they have already achieved a turnover of over Rs 1,350 crore. So, they should be able to have a turnover of Rs 2,100 crore. Even the EPS is likely to be about Rs 7 because they have already posted an EPS of Rs 4.50-4.60. So, they should be able to post an EPS of close to about 7."
"The share is now ruling at a PE multiple of less than five. There have been institutional investors also in the company for quite sometime, so they must also be keeping the watch and the corporate governance issues and all that because there were some issues in the past as well for the company. But I don’t think now those things are there. It is multidivisional, multi-location company with good presence in all the business segments and with a marketcap of close to Rs 450 crore, I think this is quite an interesting company at these levels."

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