Moneycontrol
Feb 15, 2017 04:13 PM IST | Source: Moneycontrol.com

Buy Rama Steel Tubes; target of Rs 165: Khambatta Securities

Khambatta Securities is bullish on Rama Steel Tubes has recommended buy rating on the stock with a target price of Rs 165 in its research report dated February 14, 2017.

Buy Rama Steel Tubes; target of Rs 165: Khambatta Securities


Khambatta Securities' research report on Rama Steel Tubes


Rama Steel Ltd (RST) reported robust financial performance for 3Q FY17 and was in line with our estimates. During the quarter, net sales increased by 40.4% to Rs 668 mn (Rs 475mn – 3Q FY16). In 3Q FY17, EBITDA grew by 44.1% to Rs 60 mn (Rs 42 mn – 3Q FY16) while the EBITDA margin stood at 9.0%.


Outlook


At the CMP, the stock trades at a P/E multiple of 18.4x/15.3x/13.0x FY17/FY18/FY19 EPS. With focus on expansion to high demand market, operating efficiencies and value added products, we expect the Company to deliver better results in the future. We continue to recommend BUY on the stock with our price target of Rs 165 (16.3x on FY19E EPS), an upside potential of 25%.

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