MF Global Sify puts hold on VIP Industries
MF Global Sify Securities India has recommended 'hold' on VIP Industries for a fair price of Rs 86, discounting average one year forward earnings of Rs 8.6 by 10x.
By ET Online |
MUMBAI: MF Global Sify Securities India has recommended ���hold��� on VIP Industries for a fair price of Rs 86, discounting average one year forward earnings of Rs 8.6 by 10x.
The company has declared its Apr-Jun 2008-09 result���s, sales were disappointing, it stood at Rs 160 crore, while improvement in EBITDA margin was a positive surprise. Substantial jump in other income due to forex gain boosted profit.
Consolidated profit after tax before extra-ordinary item (write off on account of VRS) stood at Rs 12.65 crore, while post extra-ordinary item it was at Rs 11.31 crore.
The brokerage expects total consolidated sales to grow at a CAGR of 7.4 per cent over next two years - from Rs 570 crore in 2007-08 to Rs 660 crore in 2009-10. Operating margins are likely to be at 10 per cent in FY09E and FY10E respectively.
Adjusted profit after tax is expected to grow at a CAGR of 10.5 per cent from Rs 21.6 crore in 2007-08 to Rs 26.4 crore in 2009-10 mainly driven by improvement in EBITDA margin and lower tax rate.
At market price, the stock trades at 9x and 8x, its 2008-09 and 2009-10 estimated EPS of Rs 7.9 and Rs 9.3. Considering the concerns in sales and profit growth, the brokerage has downgraded stock to hold.
The company has declared its Apr-Jun 2008-09 result���s, sales were disappointing, it stood at Rs 160 crore, while improvement in EBITDA margin was a positive surprise. Substantial jump in other income due to forex gain boosted profit.
Consolidated profit after tax before extra-ordinary item (write off on account of VRS) stood at Rs 12.65 crore, while post extra-ordinary item it was at Rs 11.31 crore.
The brokerage expects total consolidated sales to grow at a CAGR of 7.4 per cent over next two years - from Rs 570 crore in 2007-08 to Rs 660 crore in 2009-10. Operating margins are likely to be at 10 per cent in FY09E and FY10E respectively.
Adjusted profit after tax is expected to grow at a CAGR of 10.5 per cent from Rs 21.6 crore in 2007-08 to Rs 26.4 crore in 2009-10 mainly driven by improvement in EBITDA margin and lower tax rate.
At market price, the stock trades at 9x and 8x, its 2008-09 and 2009-10 estimated EPS of Rs 7.9 and Rs 9.3. Considering the concerns in sales and profit growth, the brokerage has downgraded stock to hold.
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