Dear All,
Forwarding you the Result Update on Surya Roshni for 4QFY2011 with a Buy recommendation and a Target Price of `137 (12 months).
Surya Roshni reported a strong set of numbers for 4QFY2011. The top line grew by 46.6% yoy to `739cr (`504cr), which was well above our estimate of `609cr. OPM also came in strong at 10.8%, reporting a 109bp yoy increase compared to 9.7% in 4QFY2010. PAT for the quarter grew by 37.5% to `40cr (`29cr) on the back of higher sales, margin expansion and nil tax rate because of adjustments. The company has expanded its capacity across products in the recent years. Going ahead, we expect this additional capacity to increase sales contribution, thereby driving the company’s growth. At the CMP of `95, the stock is trading at attractive valuations. We maintain our Buy recommendation on the stock.
Overall results well above expectations: Both the segments contributed to the company’s stellar sales growth, with the steel products division growing by 41.1% yoy and the lighting division posting 61.4% yoy growth. Margin came in at 10.8%, as against our expectations of 7.1%, owing to higher-than-expected gross margins.
Outlook and valuation: We remain positive on the company’s business outlook, owing to large capacity expansion and strengthening presence in the lighting space. Considering the above-expectation performance during the quarter,
we have increased our sales estimates for FY2012E and FY2013E by 6.5% and 7.8% to `2,870cr and `3,391cr, respectively, while OPM estimates have been increased by 38bp and 48bp to 7.7% and 7.6%, respectively. PAT estimates for FY2012E and FY2013E have been increased by 0.5% and 7.5% to `89cr and `113cr, respectively. Overall, we expect the company to post strong PAT growth at a 30.3% CAGR over FY2011–13E. At the CMP, the stock is trading at an attractive valuation of 4.1x its FY2013E EPS. We maintain our Buy recommendation on the stock with a target price of `137.
Kindly click on the following link to view the Report.
If you have any further queries, feel free to call us on 022 39357600 Ext: 6865 or mail us at advisory@angelbroking.com
With best regards,
Fundamental Advisory Desk
Angel Broking
Akruti Star,5th 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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