Buy Gammon India: IIFL

IIFL has recommended a buy rating on Gammon India in its July 1, 2008 research report. "Gammon India reported strong revenue growth of 32% during 4QFY08. EBITDA margins too expanded 90bps YoY to 9.6%. However, a sharp increase in interest costs and negative other income contained net profit growth at 6.7% YoY."

"We have assumed interest costs will increase sharply from 1QFY09, owing to interest on debt raised to finance the Italian acquisitions. The jump in interest costs in 4Q would mean further downside to earnings estimates. We will seek an explanation from the company for the sharp increase in interest costs and the nature of extraordinary expenses booked in the quarter. BUY," says IIFL's research report.

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