Buy Arshiya International; target of Rs 274: Nirmal Bang

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Buy Arshiya International; target of Rs 274: Nirmal Bang

Nirmal Bang is bullish on Arshiya International and has recommended buy rating on the stock with a target of Rs 274 in its May 13, 2011 research report.

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Nirmal Bang is bullish on Arshiya International and has recommended buy rating on the stock with a target of Rs 274 in its May 13, 2011 research report.

"Arshiya International Limited reported sales of Rs.818.8 crore for FY11( against our expectation of Rs.804.6 crore), registering a growth of 55.7% yoy. The company had posted net sales of Rs.525.9 crore during FY'10. Net profit for the year stood at Rs.74.5 crore (against our expectation of Rs.70.3 crore), registering a 19.6% y-o-y increase. Net Sales during Q4FY'11 stood at Rs.234.4 crore, registering a 38.8% y-o-y growth. Net Profit for the quarter stood at Rs.21.3 crore compared to Rs.18.5 crore during the corresponding period last year, a jump of 15% y-o-y."

"This was the first quarter after the commencement of operations at the FTWZ(at Panvel) in November 2010. The company clocked an EBIT of Rs.14.27 crore on net sales of Rs.20.7 crore during the quarter.  The logistics segment registered a growth of 14.5% y-o-y to Rs.162.5 crore during the quarter. The EBIT margins for the segment during the quarter stood at 21.9% compared to 19.8% during Q4FY'10.  Construction of the first warehouse at Khurja is progressing as per schedule. Foundation for the second warehouse is completed and erection of primary structure is under progress as per schedule.  Management has given encouraging performance review with regard to the performance of the FTWZ at Panvel."

"At the current price of Rs. 180, Arshiya is trading at a PE of 11.2x FY'12E earnings. Considering the unique business model of the company and the fact that it is in the process of setting up the business, we expect significant improvement in the performance going forward. We recommend BUY on the stock with a target of Rs 274 over the next 9 to 12 months," says Nirmal Bang research report.   

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