Edelweiss is bullish on Balkrishna Industries has recommended buy rating on the stock with a target price of Rs 1231 in its research report dated December 01, 2016.
Factoring in strong volume momentum and better margin expectations, we raise our FY17/18E EPS by 10%/11%. We also upgrade our target multiple from 13.0x to 15.0x, driven by 17 % volume CAGR over FY16-18E and opportunity in OTR market. This will also drive 521bps expansion in RoCE (323bps earlier) over FY16-18E to 24.3%. Also, utilisation at 68% in FY18E leaves further scope for growth without additional capex. Maintain ‘BUY’ with TP of INR 1,231.
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