Dear All,
Forwarding you the Result Update on Elecon Engineering for 4QFY2011 with a Buy recommendation and a Target Price of `82 (12 months).
For 4QFY2011, Elecon Engineering’s (EEC) performance was in line with our expectations. The company reported top-line growth of 6.5% yoy to `354cr. OPM expanded by 170bp yoy to 15.9%, while adjusted PAT declined by 8.1% yoy to `25cr. We have revised our earnings estimates to factor in the impact of the acquisition. We maintain our Buy recommendation on the stock.
Strong order book offers good revenue visibility: EEC's order backlog has been declining post hitting the peak of `1,812cr in 3QFY2009. At the end of March 2011, the order backlog stood at `1,384cr. We believe EEC's current order book of `1,577cr or 1.2x FY2011 consolidated revenue offers good revenue visibility.
Outlook and valuation: We believe EEC is well placed to seize the upcoming opportunities in the power sector due its strong order book, which renders high revenue visibility. We have revised our earnings estimates to factor in the impact of the acquisition. We estimate sales to register a 23% CAGR to `1,954cr over FY2011–13. The bottom line is likely to move in tandem with a 22% CAGR over the period. At current levels, the stock is trading at attractive valuations of 5.8x FY2013E earnings. Hence, we maintain our Buy recommendation on the stock with a target price of `82 (`83).
Kindly click on the following link to view the Report.
Elecon Engineering - RU4QFY2011
If you have any further queries, feel free to call us on 022 39357600, Extn: 6865 or mail us at advisory@angelbroking.com
With best regards,
Fundamental Advisory Desk
Angel Broking
Akruti Star,6th Floor, Road No.7,MIDC, Andheri (E),Mumbai – 93.
Call : (91) (022) 39357600 Ext. 6865
Website : www.angelbroking.com
Disclaimer: Ours is an advisory role. The final decision and consequences based on our information is solely yours. Moreover, in keeping with regulatory guidelines, we do not guarantee any returns on investments. Prospective investors and others are cautioned that any forward-looking statements are not predictions and may be subject to change without notice.
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