KS Oil an Edible oils and Solvent extraction company has been slipping lower and lower since last 6 months. 6 months back it costed Rs.45 and today it is at 22. More than 50% down. The reason for such a big fall can be attributed to FII selling in this stock. Goldman Sachs a big investor in this stock had sold heavily since few months. Now as the markets are improving and traders ready to take risk, FIIs might again start buying this stock. Below are the reasons to buy this stock.
1. Book value(total assets of the company divided by no. of shares) is Rs.32.51 . Fundamentally share value is always above Book value. So logically Rs.32 is achievable.
2. Its closest competitor Gokul Refoil has sales and profit less then KS Oils but still Gokul commands a Market Capitalisation(no. of shares * Price of share = value of the company) Rs.1200crores and KS Oils has Market Cap of Rs.940 crores. So logically KS Oils deserves a market cap of more than 1200 crores for which its share value should rise by 27% which gives us a value of Rs.28/share. Then again the Total assets of KS oils are Rs.2929crores. Taking the assets under consideration the value of the share should be Rs.68/per share which was its 52 week high. But looking at the market condition Rs.32 looks like a safe target which is 45% above the present price.
3. P/E ratio(price of share/earnings per share) of KS Oils is at 4.88 . Whereas Gokul Refoils has a P/E ratio of 19.39 which again gives a huge potential for upside. Even if we justify P/E ratio of 10 for KS Oils, share value should be Rs.45.
My target for the stock is Rs.32 for next 6 months and Rs. 45 till march 2012. Even if we buy now and the stock doesn't increase, we can hold the shares as KS Oils is the second largest company in Refined cooking oil in India and has good business.
Happy investing :):)
1. Book value(total assets of the company divided by no. of shares) is Rs.32.51 . Fundamentally share value is always above Book value. So logically Rs.32 is achievable.
2. Its closest competitor Gokul Refoil has sales and profit less then KS Oils but still Gokul commands a Market Capitalisation(no. of shares * Price of share = value of the company) Rs.1200crores and KS Oils has Market Cap of Rs.940 crores. So logically KS Oils deserves a market cap of more than 1200 crores for which its share value should rise by 27% which gives us a value of Rs.28/share. Then again the Total assets of KS oils are Rs.2929crores. Taking the assets under consideration the value of the share should be Rs.68/per share which was its 52 week high. But looking at the market condition Rs.32 looks like a safe target which is 45% above the present price.
3. P/E ratio(price of share/earnings per share) of KS Oils is at 4.88 . Whereas Gokul Refoils has a P/E ratio of 19.39 which again gives a huge potential for upside. Even if we justify P/E ratio of 10 for KS Oils, share value should be Rs.45.
My target for the stock is Rs.32 for next 6 months and Rs. 45 till march 2012. Even if we buy now and the stock doesn't increase, we can hold the shares as KS Oils is the second largest company in Refined cooking oil in India and has good business.
Happy investing :):)
