Monday, 21 September 2009

Escorts has target of Rs 150: Rajen Shah

Shah told CNBC-TV18, "I have loved this stock for quite a while. In fact at the Coimbatore Investor camp also we’d recommended this stock. It is a no-brainer Rs 150 stock. If you look at it, Escorts today Rs 90 crore is the equity and the price is about Rs 90. So, it is available at about Rs 800 crore of market cap. In Rs 800 crore, we are getting 1 lakh tractor manufacturing plant. When Punjab Tractors was bought over by Mahindras, they paid an EV of Rs 2,000 crore for 60,000 tractors. So, on that basis, this 1 lakh tractor manufacturing plant should be valued at Rs 3,000 crore, if somebody were to buy out this company. But that is not the case, even if we value it at Rs 1,000 crore and if you value the Escorts construction subsidiary, which is going to report almost Rs 600 crore of turnover and which could come out with an IPO in the next six months at about Rs 300 crore, that makes it Rs 1,300 crore.”

He further added, “If you see the land they have at Faridabad, about 110 acres at Faridabad, and there is the Delhi-Faridabad metro coming up in the next three years. So, The prices of this land is set to be something in the region of about Rs 1,500 crore but to be on a conservative side, even if you take it Rs 1,000 crore, that makes it Rs 2,300 crore of tractor Rs 300 crore of construction business and about Rs 1,000 crore of land. So Rs 2,300 crore of assets and you’re getting it for Rs 800 crore. So I am sure this company has got a long way to go. We had a target of Rs 150 forecasted at the Coimbatore Investor Camp.”

Source: Moneycontrol

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