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Nov 22, 2012 12:26 PM IST | Source:

Buy Grindwell Norton; target of Rs 298: Firstcall Research

Firstcall Research is bullish on Grindwell Norton and has recommended buy rating on the stock with a target of Rs 298 in its November 19, 2012 research report.

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Firstcall Research is bullish on Grindwell Norton and has recommended buy rating on the stock with a target of Rs 298 in its November 19, 2012 research report.

“Grindwell Norton was incorporated in the year 1950 for manufacture abrasive products in the name of Grindwell Abrasives, Ltd. The company entered into a technical collaboration with Norton Co of USA in 1967 for keep abreast with the latest technology and in year 1971. The name of the Company was changed to Grindwell Norton Ltd with the investment in the company equity by Norton co USA. Saint-Gobain acquired Norton Company, USA, worldwide, and six years later, GNO became the first majority-owned subsidiary of Saint-Gobain in India. In the year 1977 first silicon carbide plant was commissioned in Bangalore Karnataka state and second plant at Tirupati Andhra Pradesh in 1979 now the company manufacturing Operations were located in Mora near Mumbai, Nagpur, Banglore, Tirupati, Himachal Pradesh and Bhutan and 11 sales offices across the country and Headquartered in Mumbai. In October’2006, GNO had the honor of featuring in Forbes Asia’s “Best under a Billion” list. It was one of just 23 Indian companies listed among the top 200 companies, with sales of under a billion dollars, in the Asia-Pacific Region.”

“Grindwell Norton Limited (GNO) is one of the subsidiaries of Companies de Saint-Gobain a transnational Group, with its headquarters in Paris and with sales of €42.1 billion in 2011 reported its financial results for the quarter ended 30th September 2012. The Second quarter witnesses a healthy increase in overall sales on account of enhanced global network and exports. The company’s net profit declined by 1.76% to Rs. 240.20 million against Rs.244.50 million in the corresponding quarter ending of previous year. Revenue for the quarter rose 4.06% to Rs.2360.40 million from Rs.2268.20 million, when compared with the prior year period. Reported earnings per share of the company stood at Rs.4.06 a share during the quarter, registering 1.76% decrease over previous year period. Profit before interest, depreciation and tax is Rs.386.30 millions as against Rs.397.70 millions in the corresponding period of the previous year.”

“At the current market price of Rs.266.05, the stock P/E ratio is at 13.36 x FY13E and 11.90 x FY14E respectively. Earning per share (EPS) of the company for the earnings for FY13E and FY14E is seen at Rs.19.91 and Rs.22.37 respectively. Net Sales and PAT of the company are expected to grow at a CAGR of 12% and 13% over 2011 to 2014E respectively. On the basis of EV/EBITDA, the stock trades at 7.86 x for FY13E and 6.92 x for FY14E. Price to Book Value of the stock is expected to be at 2.78 x and 2.45 x respectively for FY13E and FY14E. The Company’s management is focus on improving price realization and operating performance (implementation of the World Class Manufacturing programme) and containing costs and working capital. At the same time, investments will continue to be made in developing new products and new markets in order to sustain growth. The first quarter witness a healthy increase in overall sales as well as profitability on account of global network and exports of products."

"We expect that the company surplus scenario is likely to continue for the next three years, will keep its growth story in the coming quarters also. We recommend ‘BUY’ in this particular scrip with a target price of Rs 298 for medium to long term investment,” says Firstcall Research report. 

Institutional holding more than 40% in Indian cos  

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