JK Tyres have a posted a good result for quarter ending Jun 2009. The EPS posted is 9 Rs as given here. Currently quoting at 92 Rs, it has a PE of about 10 for this quarter. If we consider three more moderate quarters, its EPS should be around 20 Rs, and PE 4.5...
It has invested 120 cr in OTR manufacturing expansion, its operation commence in Mar 2010. Assuming, it pushes it EPS to conservative of 30 Rs, the PE at current price is only 3. If we factor in the expansion and forward PE of even 8 ( industry average is 10), it should be quoting at 240 in year 2010 Jun or July.
I recommend a buy on JK tyres at current price with buying on dips, for a target of atleast 200 around Jun or July 2010.
Disclaimer: I have some shares of JK tyres at 79 Rs/share. Please do your due diligence before buying any shares.
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