Buy Bajaj Corp; target of Rs 472: Reliance Securities
Reliance Securities recommended buy rating on Bajaj Corp with a target price of Rs 472 in its research report dated July 13, 2017.
Reliance Securities' research report on Bajaj Corp
Founded by Mr. Chandrakant N. Doshi in 1986, Rajoo Engineers manufactures and sells plastic processing machinery and post-extrusion equipment. Listed on the BSE in 1992, it is the first extrusion company in India to be completely automated and has kept in step with technology to provide customers with the best services. With its excellence in extrusion machinery, in last 3 decades Rajoo has completed more than 2,000 installations across the globe. It exports to more than 56 countries and its facilities are CE, TUV D&B certified, meeting requirements of different nations for export. With its diversified product line in extrusion and post -extrusion machines, Rajoo has become a market leader in blown-film lines, sheet lines and thermo-formers on the Indian subcontinent. The management has built up strong goodwill through the quality of its products, constant upgrading technology, after-sales services and value-for-money solutions. Around 60% of its business arises from existing customers.
Looking ahead, we believe that volume growth trajectory to improve in ensuing quarters as trade settles post GST roll-out. Macro factors such as good monsoons, higher share of organised players and implementation of 7th Pay Commission’s recommendations will also benefit Bajaj Corp. We expect the Company to report net sales of Rs8.9bn and Rs10.2bn and net profit of Rs2.6bn and Rs3bn in FY18E and FY19E, respectively. EPS is expected to be Rs17.8 and Rs20.7 in the same period. At CMP, the stock currently trades at attractive valuations of 19.5x FY19E earnings. We maintain our BUY recommendation on the stock with a revised Target Price of Rs472, based on 22x June’19 earnings.
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