Buy Consolidated Construction Consortium: PINC Research

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Buy Consolidated Construction Consortium: PINC Research

PINC Research is bullish on Consolidated Construction Consortium (CCCL) and has recommended buy rating on the stock with a target of Rs 107 in its October 7, 2010 research report

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PINC Research is bullish on Consolidated Construction Consortium (CCCL) and has recommended buy rating on the stock with a target of Rs 107 in its October 7, 2010 research report.

"Consolidated Construction Consortium (CCCL) has been trading at an average of 19.5x one year forward since the listing Oct 2007, with average yearly peak valuation of 44.1x in FY08 and low of 11.6x in FY10, which we believe is high and not a fair depiction of CCCL's future valuation multiple. We also note that over the last one year the stock has been trading at one year forward avearage of 14x with a high of 16.6x and low of 11x, which on the otherhand is more likelihood of its future valuation multiple given the current earnings perspective. The reason behind its rich valuations are its managerial ability to build a sizeable business in a decades time, quick traction shown in the infrastructure segment (53% of OB from 10% in FY07), superior return ratios (RoCE and RoE) and better working capital management."

"We believe the stock to trade in the range of 14-15x, given its strong order book position and earning growth to flow back at 15.5% and 33.4% in FY11 & FY12, hence we assign a PE multiple of 14x to FY12E earnings of Rs 7.6, which yields a target price of Rs 107; this implies potential upside of ~29% from the current level. We initiate coverage on CCCL with a 'BUY' rating. We do not value the SEZ project (nascent stage of development) or any real estate projects, which can provide further upside to the stock," says PINC Research report.

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To read the full report click on the attachment