Broking house, IDBI Capital Market Services has recommended buy rating on the Easun Reyrolle with a target price of Rs 750 in one-year's time.
IDBI Capital Market Services report on Easun Reyrolle
"Easun Reyrolle (ERL), known for its quality manufacturing, has 20% market share in the relay panel market in the country. Last year the company made its significant foray in to the manufacturing of MV Switchgears near its control panel unit at Hosur. It has also entered into turnkey project business and has developed a comfortable order book. We expect the massive investment envisaged by the transmission and distribution sector in the country coupled with company's improved product lines and new business focus would augur well in the long run."
"After the 107% jump in sales in FY06 the company's sales growth has tapered off to some extent. During H1FY07 the sales of the company increased by 26% to Rs 592 million and PAT increased by 24% to Rs 73 million. We expect post completion of the switchgear facility at Hosur and better revenue from the turnkey projects the sales growth of the company would take a good pace in future. The share price is trading at 11.1x to FY07E EPS of Rs 51.4 and 7.6x to FY08E EPS of Rs 75.1. Being a quality manufacturer in the high growth transmission and distribution industry the stock is a good value pick at the current levels. We expect a target price of Rs 750 in one-year's time."
