Moneycontrol
Feb 16, 2017 11:36 AM IST | Source: Moneycontrol.com

Buy Balkrishna Industries; target of Rs 1503: Edelweiss

Edelweiss is bullish on Balkrishna Industries has recommended buy rating on the stock with a target price of Rs 1503 in its research report dated February 13, 2017.

Buy Balkrishna Industries; target of Rs 1503: Edelweiss


Edelweiss' research report on Balkrishna Industries


Balkrishna Industries’ (BKT) Q3FY17 result highlight again was the strong 22% YoY spurt in volumes to 40,415MT (21% in Q2FY17). Revenues, at INR 8.8bn (net of excise), jumped 26% YoY. Growth was driven by higher share of replacement revenues and OTR segment with Americas driving growth. EBITDA margin, at 31.5%, reduced QoQ from 33.0% as it was impacted by the increase in rubber prices.


Outlook


While margins are expected to marginally correct due to jump in raw material prices, we see PAT increasing 18% YoY in FY19E, RoCE expansion of 460bps (Over FY17-19E) and expect it to become near debt free. We value BKT at 15.0x FY19E EPS giving us TP of INR 1,503 (INR 1,231 earlier). Maintain ‘BUY’.

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