Kotak Securities upgrades Nitin Fire to ‘Buy’ with target of Rs 410

MUMBAI: Kotak Securities has upgraded Nitin Fire with a ‘Buy’ recommendation. The brokerage has increased the price target to Rs 410 after third quarter results were announced.

“For Q3FY10, Nitin Fire reported net sales of Rs 982 million, up 43.7% YoY and up sharply 68.2% on sequential basis primarily due to higher revenues of the fire protection business which contributed 70% of revenues, 17% of revenues was on account of cylinder manufacturing business and balance 13% was from trading of CNG cylinders.

At the current market price of Rs 364, the stock trades at attractive valuations of 2.1x book value, 8.9x earnings and 8.2x cash earnings based on FY11E.

We are positive on the long term growth prospects of the company on account of growth in the high margin fire protection business of the company and also its CNG cylinders business due to the expected huge demand of CNG cylinders for the automobiles in India due to rising gas availability and various city gas distribution projects.

Due to 12% upside potential we upgrade NFPIL to BUY with increased price target of Rs.410,” the report said.