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Dec 04, 2012 12:56 PM IST | Source:

Buy Neyveli Lignite; target of Rs 89: Firstcall Research

Firstcall Research is bullish on Neyveli Lignite Corporation and has recommended buy rating on the stock with a target of Rs 89 in its December 3, 2012 research report.

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Firstcall Research is bullish on Neyveli Lignite Corporation and has recommended buy rating on the stock with a target of Rs 89 in its December 3, 2012 research report.

“Neyveli Lignite Corporation Ltd a “Navratna” Government of India Enterprise, under the administrative control of MOC has a chequered history of achievements in the last 56 years since its inception in 1956. A pioneer among the public sector undertakings in energy sector, All the Mines of NLC are ISO Certified for Quality Management System, Environmental Management System and Occupational Health & Safety Management System. All the Power stations of NLC are also ISO Certified for Quality Management System and Environmental Management System. NLC’s growth is sustained and its contribution to India’s social and economic development is significant.”

“Neyveli Lignite Corporation Ltd operates three open cast Lignite mines of total capacity of 30.60 million tones and three power stations of capacity 2740 MW at Neyveil and one at Barsinagar in India, reported its financial results for the quarter ended 30th Sep, 2012. The second quarter witnesses a healthy increase in overall sales as well as profitability of the company. The company’s net profit jumps to Rs.3348.40 million against Rs.2783.20 million in the corresponding quarter ending of previous year, an increase of 20.31%. Revenue for the quarter increase 16.43% to Rs.13492.10 million from Rs.11588.30 million, when compared with the prior year period. Reported earnings per share of the company stood at Rs.2.00 a share during the quarter, registering 20.31% increase over previous year period. Profit before interest, depreciation and tax is Rs.5783.40 millions as against Rs.5146.80 millions in the corresponding period of the previous year.”

“At the current market price of Rs 79, the stock P/E ratio is at 8.47 x FY13E and 7.66 x FY14E respectively. Earning per share (EPS) of the company for the earnings for FY13E and FY14E is seen at Rs.9.32 and Rs.10.32 respectively. Net Sales and PAT of the company are expected to grow at a CAGR of 17% and 10% over 2011 to 2014E respectively. On the basis of EV/EBITDA, the stock trades at 4.97 x for FY13E and 4.65 x for FY14E. Price to Book Value of the stock is expected to be at 0.97 x and 0.86 x respectively for FY13E and FY14E. We expect that the company surplus scenario is likely to continue for the next years, will keep its growth story in the coming quarters also. We recommend ‘BUY’ in this particular scrip with a target price of Rs 89 for medium to long term investment,” says Firstcall Research report.

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