LKP securities puts 'buy' on Greaves Cotton
LKP Securities has recommended a ‘buy’ on diesel engine manufacturer with a target price of Rs 140.
By ET Bureau |
Greaves Cotton
cmp: Rs 72
target price: Rs 140
LKP Securities has recommended a ���buy��� on diesel engine manufacturer with a target price of Rs 140. The outfit says it is bullish on Greaves even in a slowing and challenging environment due to factors such as launch of twin cylinder diesel engine plant, tie-up with BOMAG for soil compactors, acquisition of Farymann in Germany, easing of critical input costs among others.
It further says despite being an India-centric company, as it now has an attractive window of overseas opportunity by virtue of higher outsourcing from the Farymann unit and encouraging orders from South and East Africa. ���
Although the first quarter of 2009 witnessed a 13% rise in revenues at Rs 350 crore and a 10% growth in Profit Before Tax at Rs 30 crore, we assume a stress-case scenario of a 20% degrowth in revenues and a 35% degrowth in profits for the remaining three quarters of the current fiscal,��� the note says.
It adds that despite this assumption, Greaves is trading at a book value having a dividend yield of 5.7%. It adds, ���
With a nominal debt-equity of 0.13 and having completed its capital expenditure programmes through internal accruals, we believe that Greaves with cash per share of Rs 15 is a good contra call in an India-Centric business. We recommend a buy with an 18-month price target of Rs 140.���
cmp: Rs 72
target price: Rs 140
LKP Securities has recommended a ���buy��� on diesel engine manufacturer with a target price of Rs 140. The outfit says it is bullish on Greaves even in a slowing and challenging environment due to factors such as launch of twin cylinder diesel engine plant, tie-up with BOMAG for soil compactors, acquisition of Farymann in Germany, easing of critical input costs among others.
It further says despite being an India-centric company, as it now has an attractive window of overseas opportunity by virtue of higher outsourcing from the Farymann unit and encouraging orders from South and East Africa. ���
Although the first quarter of 2009 witnessed a 13% rise in revenues at Rs 350 crore and a 10% growth in Profit Before Tax at Rs 30 crore, we assume a stress-case scenario of a 20% degrowth in revenues and a 35% degrowth in profits for the remaining three quarters of the current fiscal,��� the note says.
It adds that despite this assumption, Greaves is trading at a book value having a dividend yield of 5.7%. It adds, ���
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With a nominal debt-equity of 0.13 and having completed its capital expenditure programmes through internal accruals, we believe that Greaves with cash per share of Rs 15 is a good contra call in an India-Centric business. We recommend a buy with an 18-month price target of Rs 140.���
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