Buy Ahmednagar Forg with target of Rs 270: Angel Broking

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Buy Ahmednagar Forg with target of Rs 270: Angel Broking

Angel Broking has maintained buy rating on Ahmednagar Forgings with a target of Rs 270 in its February 1, 2008 report.

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Angel Broking has maintained buy rating on Ahmednagar Forgings with a target of Rs 270 in its February 1, 2008 report. "In its 2QFY2008 Results, Ahmednagar Forgings (AFL) has announced a 9% growth in Net Sales and 1% increase in Bottomline. The company reported Rs166 crore Net Sales, which was lower than our estimate of Rs 179 crore. OPM were stable for 2QFY2008 mainly on account of better operational efficiencies. AFL reported flat yoy growth in Net Profit to Rs 17.7crore (Rs17.5cr). NPM declined by 90bp to 10.7% as against 11.5% in 2QFY2007. This was mainly on account of higher Interest and Deprecation charges. AFL targets to have an Export order book of Rs100 crore to be executed in FY2008E. During FY2007,Export contribution to Total revenues increased to 32% (12%).  AFL is targeting Export revenues of Rs 270crore in FY2008E. AFL, an Amtek group company, has an assured and strong order book of Rs1,000 crore to be completed in FY2008E. AFL has gained from the good relationship that the Amtek Group enjoys with major domestic and overseas OEMs. AFL has been consistently achieving high levels of profitability. A robust Topline growth on the back of a surge in Exports is expected to result in AFL's Bottomline growing substantially in FY2008E and over the next two-three years. At the CMP, the stock is trading at 8x FY2008E and 6.4x FY2009E EPS. The stock is valued at 3.6x FY2009E EV/EBIDTA. We maintain a Buy on the stock, with a Target Price of Rs270," accoding to Angel Broking report.

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