Macquarie sees 40% upside in Welspun Gujarat
Macquarie Research has reiterated its ‘outperform’ rating on Welspun Gujarat following third quarter results.
By ET Bureau |
MUMBAI: Macquarie Research has reiterated its ‘outperform’ rating on Welspun Gujarat following third quarter results. It has fixed a 12-month target of Rs 360 on the stock, an upside of over 40 per cent from current market price of Rs 257 per share.
“Welspun's 3QFY10 earnings were 10 per cent ahead of our expectations. WGS reported consolidated PAT growth of 268 per cent YoY to Rs 1.7 billion. However, adjusted for forex recovery, PAT growth was 28 per cent y-o-y to Rs 1.3 billion. While volumes were lower due to a maintenance shutdown, margins were much stronger than our expectations. We reiterate our Outperform recommendation.
We are raising FY10E EPS by 8 per cent on the back of higher-than-expected earnings in 3QFY10. WGS is trading at a 40 per cent discount to the global peer FY11E PER. Our target price of Rs 360 implies an FY3/11E PER of 14x, which is at a 20 per cent discount to global peers despite better earnings growth,” the report said.
“Welspun's 3QFY10 earnings were 10 per cent ahead of our expectations. WGS reported consolidated PAT growth of 268 per cent YoY to Rs 1.7 billion. However, adjusted for forex recovery, PAT growth was 28 per cent y-o-y to Rs 1.3 billion. While volumes were lower due to a maintenance shutdown, margins were much stronger than our expectations. We reiterate our Outperform recommendation.
We are raising FY10E EPS by 8 per cent on the back of higher-than-expected earnings in 3QFY10. WGS is trading at a 40 per cent discount to the global peer FY11E PER. Our target price of Rs 360 implies an FY3/11E PER of 14x, which is at a 20 per cent discount to global peers despite better earnings growth,” the report said.
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