Buy Bombay Dyeing; target of Rs 894: Angel Broking

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Buy Bombay Dyeing; target of Rs 894: Angel Broking

Angel Broking is bullish on Bombay Dyeing and Manufacturing Company and has recommended buy rating on the stock with a target of Rs 894 in its October 21, 2010 research report.

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Angel Broking is bullish on Bombay Dyeing and Manufacturing Company and has recommended buy rating on the stock with a target of Rs 894 in its October 21, 2010 research report.

"Bombay Dyeing and Manufacturing Company (BD) monetizing its legacy land bank in a timely manner will be a key trigger for its stock performance. Moreover, ongoing recovery in its manufacturing (textile and polyester units) business will act as an additional catalyst for the stock. BD intends to develop 9.0msf of saleable area (1.0msf already developed) on its historical mill land located in Central Mumbai over the next 8-10 years. For the manufacturing business, the company has undertaken cost-reduction measures and launched new products to turn profitable."

"EBIT loss was lower for the textile division at Rs 14.4 crore in 1HFY2011 versus Rs 22.3 crore in 1HFY2010, while the polyester division reported profit of Rs 9.1 crore in 1HFY2011 versus loss of Rs 39.6 crore in 1HFY2010. The promoters recently issued 4 million warrants at Rs 527.83 per share, which will increase their stake from 47.8% to 52.7% post conversion."

"We have valued the real estate business at Rs 940 per share and the manufacturing business at 0.5x of its asset value fetching Rs 112 per share. Hence, we recommend a Buy rating on the stock with a target price of Rs 894 per share (implying 43% upside from the current level), which is at 15% discount to our NAV," says Angel Broking research report.

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To read the full report click on the attachment