ICICI Direct is bullish on Solar Industries has recommended buy rating on the stock with a target price of Rs 697 in its research report dated November 25, 2016.
ICICI Direct's research report on Solar Industries
Over the past two or three years, SIL has commanded premium valuations mostly due to accelerated growth in its key segments – bulk (22% CAGR in FY12-16) and cartridge (12% CAGR in FY12-16). Anticipation of higher coal production in India, pick-up in cartridge due to pick-up from private infrastructure players, higher exports and improved visibility of orders from defence segment also helped maintain the momentum. Despite subdued performance over the past two quarters, we believe SIL’s earnings will grow, albeit at a slower pace of 18.5% CAGR in FY16-18E (vs. 20.6% earlier). We continue to value SIL at 27x FY18E EPS of Rs 25.8 to arrive at a target price of Rs 697/share. We maintain BUY recommendation on the stock.
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