(July 18, 2011)
Bimetal Bearings can move to Rs 400-425, says SP Tulsian of sptulsian.com.
Tulsian told CNBC-TV18, "Bimetal Bearings is an amalgamation group company and this cannot be compared with SKF or FAG because they don't make broad range of bearing but they make engine bearings, they make alloy powder, engine bushings and maybe bimetallic strips. The company is having technical collaboration with Daido Metal in Japan and they are having three manufacturing plant."
He further added, "It just a small company with equity of less than 4 crore and the topline of 150 crore but if you see the marketcap it is ruling at 125 crore that means the turnover to marketcap ratio is less than 1, while in case of other bearing company it is at 2-2.5. If you go by the EPS, they posted an EPS of Rs 24 for FY11 and 40% of that, the PAT of 9 crore, 40% of that came in Q4. So I am expecting that there has been margin expansion for the company as well as there is likely to be improvement in the topline as well."
"They are largely catering to the automotive sector though they are catering to defense and railways also in a very small manner. But taking all this into consideration, company is totally debt free, book value of the share is close to about 330 and the kind of run up which we have seen in the share price of FAG as well as SKF and even the ABC Bearing for that matter, I think this stock looks quite reasonable. If someone can keep a view of about 8-10 months, the share can move to Rs 400-425 in this period with virtually no downside risk from hereon."
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