Buy Aditya Birla Nuvo; tgt of Rs 1012: Firstcall Research

“Aditya Birla Nuvo Ltd. (ABNL), a USD 4 billion diversified conglomerate by revenue size, is a part of Aditya Birla Group, a USD 35 billion Indian business house. ABNL has a market cap of ~USD 2 billion. ABNL is present across Financial Services, Telecom, Fashion & Lifestyle, IT-ITeS and Manufacturing businesses. It is a leading player in most segments, including viscose filament yarn, carbon black, branded garments, agri-business, textiles and insulators. Over the past few years, Aditya Birla Nuvo, through its subsidiaries and joint ventures, has made successful forays into life insurance, telecom, business process outsourcing (BPO), IT services, asset management and financial services. Powered by an intellectual capital of over 50,000 employees and an optimum mix of revenue and profit streams, the company is in a strong position to invest in high growth businesses to maximize long-term shareholder gains.”

“During the quarter, Net sales rose by 17.86% to Rs. 53417.70 million from Rs.45322.50 million in the same quarter last year and the Total Profit for the quarter ended September 2011 was Rs. 2142.50 million grew by 104.46% from Rs.1047.90 million compared to same quarter last year. Aditya Birla Nova Ltd. has reported consolidated net profit of Rs 2142.50 million for the quarter ended on September 30, 2011 as against Rs 1047.90 million in the same quarter last year, an increase of 104.46%. It has reported net sales of Rs 53417.70 million for the quarter ended on September 30, 2011 as against Rs45322.50 million in the same quarter last year, a rise of 17.86%. Total income grew by 17.71% to Rs 53959.80 million from Rs. 45840.90 million in the same quarter last year. During the quarter, it reported earnings of Rs 18.87 a share.”

“At the current market price of Rs 896, the stock is trading at 9.83 x FY12E and 8.68 x FY13E respectively. Earning per share (EPS) of the company for the earnings for FY12E and FY13E is seen at Rs.95.17 and Rs.107.67 respectively. Net Sales and PAT of the company are expected to grow at a CAGR of 5% and 215% over 2010 to 2013E respectively. On the basis of EV/EBITDA, the stock trades at 3.36 x for FY12E and 3.05 x for FY13E. Price to Book Value of the stock is expected to be at 1.35 x and 1.15 x respectively for FY12E and FY13E. We expect that the company will keep its growth story in the coming quarters also. We recommend ‘BUY’ in this particular scrip with a target price of Rs 1012 for medium to long term investment,” says Firstcall Research report.

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