Stock Review: Lakshmi Electrical Control Systems

This stock is right now hovering around Rs 250-260 odd mark. The company charges a depreciation of Rs 20 per share. I get comfort on the cash EPS front, even if the company is able to maintain its topline growth. That means the company would still be doing somewhere around that 150 odd mark in terms of topline. On a conservative side, if I estimate because of shrinkage of margin and other execution problems, they would still be delivering Rs 28 which is 20% less than last year.

With Rs 20 of depreciation plus Rs 28 it gives you a cash EPS of close to Rs 50 on the most conservative estimates. The company would be able to do close to Rs 58-60 of cash EPS on a higher front and close to Rs 35 of EPS considering that they will be able to maintain their margins and topline, this is one stock that people can look to for good dividend yields and good parentage.

The promoters have been increasing stake slowly because 26% is what they own but I am not sure about how the close circle owns this particular stock. If 26% is owned and looking at the recent changes in norms, this can be a safe haven for investors who are looking for some momentum on the upside. I have a target of Rs 320 and Rs 380 considering the scenario the market is in right now. One should not enter aggressively into the stocks recommended today. Add small quantities and on dips for both stocks.