Expect over 40% upside in Shri Lakshmi Cotsyn: Kotak

MUMBAI: Kotak Securities is positive on the medium to long term growth prospects of Shri Lakshmi Cotsyn. It has initiated Buy ‘recommendation’ on the stock and expects it to touch Rs 220 in next one year.

“Shri Lakshmi Cotsyn (SLC) is a leading manufacturer of quality textile products. It exports to reputed clients like IKEA, Wal-Mart and J C Penny among others. It has successfully diversified into defense products.

Due to expansions in technical textiles and focus on higher margin defense business we expect PAT of SLC to grow at CAGR of 24.4% from FY10 to FY12E.

At the current market price of Rs 154, SLC is trading at attractive valuation of 3.3x FY12E fully diluted EPS of Rs 46.6. We are positive on the medium to long term growth prospects of SLC.

Therefore, we are initiating coverage with a BUY recommendation on SLC with a price target of Rs 220 (43% upside potential) over a 12-month horizon. This is based on the DCF method of valuation, with 12.6% WACC and 4% terminal growth rate,” the report said.