Buy Action Const; target of Rs 82: Prabhudas Lilladher

3350 Investors following Action Const. Share this News with them.

0

Like this story, share it with millions of investors on M3

Buy Action Const; target of Rs 82: Prabhudas Lilladher

Prabhudas Lilladher is bullish on Action Construction Equipment (ACE) and has recommended buy rating on the stock with a target of Rs 82 in its November 1, 2010 research report.

Post your opinion here

 

0

Tweet

Share on Tumblr

Watch CNBC-TV18 live only on MYTV >> ALSO READ See previous views by Prabhudas Lilladher See what other Experts & Brokerages are saying about Action Const See messages about Action Const Action Const BSE | NSE 31/05/12 Are Mutual Funds betting on Action Const?

Prabhudas Lilladher is bullish on Action Construction Equipment (ACE) and has recommended buy rating on the stock with a target of Rs 82 in its November 1, 2010 research report.

"Action Construction Equipment (ACE) reported strong sales growth of 56.8% YoY at Rs 1.5 billion. The company reported strong volume growth across its various product segments. The largest segment, Mobile pick and carry cranes (~55% of revenues), reported a volume growth of 44% for the quarter to 951 units. Tractors segment (~14% of revenues) reported slightly slower volume growth of 18.8% for the quarter to 695 units. The slower growth in the tractor segment was on account of a slowdown in funding from banks. As a result, ACE had to tie up with private NBFC's. Hence, the company expects the tractor volumes to pick up meaningfully over the next few quarters."

"Despite a strong volume growth, margin was down 20bps YoY to 8.1% on account of an increase in input costs like steel and significant increase in transport costs. ACE is confident of passing the cost in the subsequent quarter and report better margins, going ahead. Increase in the employee cost by 49.3% YoY to Rs 75 million on account of payment of increments in the current quarter also impacted margins."

"At the CMP of Rs 60, the stock trades at 11.6x FY11E and 8.0x FY12E earnings, respectively. We believe that the volume growth will drive margins and RoE expansion. We expect the stock to deliver 41% and 59% CAGR on topline and bottom - line, respectively over FY10 - 12E. We maintain our 'BUY' rating on the stock with a target price of Rs 82," says Prabhudas Lilladher research report.

Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own, and not that of the website or its management.Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

To read the full report click on the attachment