SPA Research is bullish on Easun Reyrolle (ERL) and has recommended a buy rating on the stock with a target price of Rs 1055.
SPA Research report on Easun Reyrolle Limited:
We had initiated coverage on Easun Reyrolle Limited (ERL) on 19th April 2007, at Rs 721. Since then the stock has risen 15%. ERL has reported excellent Q4FY07 results, which were above our estimates. This has lead to revision in our earning estimates and the price target upwards from Rs 850 to Rs 1055, which is based on the future earnings growth.
FY07 Results:
On the full year basis the company has posted a topline growth of 25% to Rs 1330mn from Rs 1064 million in FY06. The though the EBITDA margin has declined by 27bps the net profit margin has improved by 100 bps from 12.3% to 13.3%. In the year FY07 the company has expanded its Switchgear capacity, which has come on stream only in Q4FY07 thus the full impact of the capacity enhancement, will be visible in FY08.
