Exit Ipca Laboratories above Rs 500: Tulsian

Investment Advisor SP Tulsian is of the view that one can exit Ipca Laboratories above Rs 500.

Tulsian told CNBC-TV18, "Ipca Laboratories yesterday announced the buyback from the open market for which they made an allocation of about Rs 60 crore and they will be buying shares up to Rs 600. So suppose if I take the present price of Rs 450 and I presume that if they make use of the entire allocated amount of Rs 60 crore, probably they should be able to mop up about 6% of the company’s equity. But if you see the financial performance that has been very good for Q2 maybe FY09 should be having an EPS of close to Rs 54-56. If I take that it translates into a P/E multiple of about 8-9 in line with the other pharma companies where we have been seeing huge forex losses that is not the case with this company. They are not ridden with too much of the debt in fact they have the surplus cash that’s the reason they made an allocation of Rs 60 crore for buyback. Overall, if one can remain invested in a stock at least look to exit maybe above Rs 500 or so."

Disclosure: Analyst has holdings in Hindalco and GVK.

Source: Moneycontrol