Buy Abhishek Industries: IL&FS Investsmart

IL&FS Investsmart report on Abhishek Industries:

"During Q2FY07,  Abhishek  Industries reported a 28% YoY growth  in  topline to Rs2037.7mn. New capacities, which became operational during the quarter, increased the company's production volumes and lead to this revenue growth. Yarn and terry towel segments continued to show strong growth in revenues by 44% YoY and 26.5% YoY respectively."

"Abhishek is ramping up capacities in both, its textile and paper divisions. The impact of high interest and depreciation costs, however, has been partially   offset by the commencement of new production capacities. Nevertheless, we remain concerned over the performance of the paper and chemical divisions, as the outlook for the input costs of these divisions appears favourable.  The stock is currently trading at a P/E of 8.2X our EPS estimates of FY07E. With investments expected to pay- off post Q3FY08, we rate the stock 'Buy' with a price target of Rs 36."