Prerna Jhunjhunwala, Daljeet Kohli’s trusted aide, has been associated in the HSIL recommendation from the very beginning. She has kept a hawk eye on the stock and painstakingly sifted through reams of data to analyze all of HSIL’s strengths and weaknesses.
Together, Daljeet and Prerna have hand-held investors and guided them to fabulous profits by periodically sending encouraging updates on why they ought to buy the stock.
You can see the systematic manner in which Daljeet and Prerna have worked on the stock. They first quietly put HSIL in the Model Portfolio on 16th April when it was at Rs. 136. Then, on 23rd May 2014, when the price had surged to Rs. 215, they felt more confident about the stock and issued a formal “initiating coverage” report with a price target of Rs. 278. Later, when HSIL reported robust FY14 results, the duo reiterated a buy and increased the target price to Rs. 330.
Now that HSIL has effortlessly crossed the target price of Rs. 330, investors are anxiously looking to Daljeet and Prerna for guidance about what they should do with the stock.
Fortunately, Prerna Jhunjhunwala has rushed out an update in which she has succinctly advised us about what we should do with HSIL. Let’s listen in:
“At CMP of Rs 333, the stock trades at 20.3x and 13.1x its FY15E and FY16E earnings of Rs 16.4 and Rs 25.5 per share respectively. Despite the sharp run-up in share price post Q1FY15 results, the valuation appears attractive. Its key competitor Cera Sanitaryware Ltd trades at PE of 26.3x its FY16E Bloomberg consensus earnings estimate. We value HSIL on SOTP basis. We revise our FY16E target EV/EBITDA multiple for building products segment to 10x from 8x earlier (Cera trades at EV/ EBITDA multiple of 11.7x FY16E Bloomberg consensus) and maintain 3x target EV/ EBITDA multiple for packaging products segment. Accordingly we arrive at target price of Rs 425 on the stock. We maintain our BUY rating.”
So, there you have it. Clear and confident advice, with no room for ambiguity. Prerna’s target price is about 20%+ from the CMP of Rs. 352.
Incidentally, Mehta Equities have also issued a report on HSIL advising a buy. They have projected a target price of Rs. 600, which is a long way from the CMP.
If you don’t have a SIP in HSIL already running, you ought to seriously consider it. My next update will be when the stock touches Rs. 425. How long will it take to get there?