Accumulate TIL; target of Rs 800: Sushil Finance

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Accumulate TIL; target of Rs 800: Sushil Finance

Sushil Finance has recommended accumulate rating on TIL with a target of Rs 800 in its November 15, 2010 research report.

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Sushil Finance has recommended accumulate rating on TIL with a target of Rs 800 in its November 15, 2010 research report.

"TIL's Consolidated Revenues, EBITDA and APAT stood at Rs 3544.7 million, Rs 292.4 million and Rs 143.4 million respectively during Q2FY11. Its Consolidated EBITDA margins stood at 8.2%. The lower EBITDA margin during the quarter was mainly due to the higher Revenue contribution from the prime products sales, where the EBITDA margins are usually low. However, the margins are expected to improve going forward, when the contribution from support services sales will increase for these prime products."

"During the quarter, Revenues from its material handling segment grew by 35.9% QoQ & 29.5% YoY to Rs 523.4 million. The Revenues from its construction & mining equipment segment and power system segment grew by 14.1% QoQ & 69% QoQ to Rs 2,016.1 million & Rs 1,005.2 million respectively, while the YoY growth of construction & mining business and power system segment is not comparable as they also includes TIL's subsidiaries Revenues."

"As the Company has started reporting consolidated results from Q1FY11 onwards and transferred its Caterpillar distribution business into its wholly owned subsidiary Tractors India Pvt. Ltd (TIPL), the standalone performance reported by TIL is not comparable. However, TIL delivered excellent performance across the segments it operates. The Revenues and PBT of TIL including of its subsidiary TIPL grew by 28.6% YoY and 32.4% YoY to Rs 2672 million and Rs 135 million respectively."

"In view of its excellent performance during H1FY11 and its outlook for the future, we have increased our FY11E & FY12E Revenues estimates. We have also increased our FY11E & FY12E APAT estimates. We now expect its consolidated Revenues to grow by 29.6% in FY11E & by 14.3% in FY12E and its APAT to grow by 14% & 18.3% in FY11E & FY12E respectively. At CMP of Rs 704, the stock is trading at a valuation of 10.4x its FY11E EPS of Rs 67.6 and 8.8x its FY12E EPS of Rs 80. We change our rating to 'Accumulate' on the stock with increased target price of Rs 800 (10x FY12E EPS)," says Sushil Finance research report.

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To read the full report click on the attachment