Buy Elecon Eng; target of Rs 101: Emkay

6033 Investors following Elecon Eng. Share this News with them.

0

Like this story, share it with millions of investors on M3

Buy Elecon Eng; target of Rs 101: Emkay

Emkay Global Financial Services is bullish on Elecon Engineering Company and has recommended buy rating on the stock with a target of Rs 101 in its August 4, 2011 research report.

Post your opinion here

 

0

Tweet

Share on Tumblr

RELATED NEWS Angel Broking neutral on Dena Bank Angel Broking neutral on Bhushan Steel Angel Broking neutral on Central Bank of India ALSO READ See previous views by Emkay Global Financial Services See what other Experts & Brokerages are saying about Elecon Eng See messages about Elecon Eng Elecon Eng BSE | NSE 01/06/12 Are Mutual Funds betting on Elecon Eng?

Emkay Global Financial Services is bullish on Elecon Engineering Company and has recommended buy rating on the stock with a target of Rs 101 in its August 4, 2011 research report.

"Elecon Engineering (EEL) Q1FY12 performance was in line with estimates at the operational level. Revenue growth for the quarter was muted at 4% yoy to Rs2.6 bn, attributed to 5% yoy decline in MHE division - below estimates. However, 240 bps yoy to 17.5% expansion in operating margins offset muted revenue growth, above estimates. Expansion in operating margins was attributed to favourable revenue mix. Consequently, operating profit growth at 21% yoy to Rs450 mn was in line with estimates. Led by margin expansion, adjusted net profit growth was healthy at 12% yoy to Rs149 mn - in line with estimates."

"Material Handling Equipment (MHE) division continued to witness slow ramp-up in order book execution. Despite healthy opening order backlog, revenues declined 5% yoy to Rs11.8 bn - versus our estimates of 18% yoy growth. However, EBIT margins expanded by 80 bps yoy to 13.6%, ahead estimates - attributed to higher revenue contribution from high margin Products. Transmission Equipment (TE) division continued to witness sustained momentum. Key headline numbers are (1) Revenues grew by 20% yoy to Rs1.2 bn (2) EBIT margins remained stable at 15.2%, in line with estimates."

"EEL has reported sustained momentum in earnings growth - consistently meeting expectations in difficult business conditions. We expect EEL to witness earnings growth at 19% CAGR during FY11-13E period - amongst high growth companies in EMKAY Capital Goods universe. Management has shelved plans to undergo corporate restructuring - addressing key investor overhang. However, given the high DER of 1.3X, equity dilution risk continues to exist. Given the consistent performance, we roll over our price target to FY13E earnings and revise our price target to Rs101 (@10X PER) and reiterate our BUY rating," says Emkay Global Financial Services research report.

FIIs holding more than 30% in Indian cos

Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

To read the full report click on the attachment