Buy Everest Inds; target of Rs 150: Sunidhi Securities

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Buy Everest Inds; target of Rs 150: Sunidhi Securities

Sunidhi Securities is bullish on Everest Industries and has recommended buy rating on the stock with a target of Rs 150 in its January 6, 2012 research report.

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Sunidhi Securities is bullish on Everest Industries and has recommended buy rating on the stock with a target of Rs 150 in its January 6, 2012 research report.

"Established in 1934, in Katni, Madhya Pradesh, formerly known as Eternit Everest is the first plant in India that was setup to manufacture Fiber-Cement Roofing Sheets & Accessories. EIL manufactures fibre based cement products such as sheets for roofing and interiors as well as non asbestos flat sheets for varied applications including pre-fab housing. The present installed capacity is 7.1 lakh tpa and pre engineered steel building capacity of 30,000 tonnes.  EIL was put on the block in 2006 after Holcim, the world's second largest cement producer, gained control of ACC by acquiring a majority stake in Ambuja Cement India, an investment arm of the Sekhsarias. Following the Holcim's decision to exit the cement products business, Everest Finvest (India) controlled by Sekhsaria of GACL acquired 50% stake in EIL for Rs 134 a share for Rs 99.2 crore in. It also made an open offer to acquire additional 20% shares at Rs 184/ share."

"From a roofing sheet manufacturing, EIL is evolving into a complete building solutions organization. Everest follows a solutions approach where various products and services are integrated to meet customer needs. This customer oriented approach has resulted in substantial brand recall for brand Everest. It now offers a complete range of building solutions like roofing, ceilings, walls, flooring, cladding, doors and pre-engineered steel buildings for the industrial, commercial and residential sectors.  Cement sheets are emerging as a cheaper alternative to galvanized steel sheets. Galvanized steel sheets are also used in housing, as an alternative to asbestos-based products. But the rising steel prices have made galvanized steel sheets more expensive, thereby increasing the gap between the prices of the two products."

"Being in the construction industry for more than 75 years, Everest has introduced the most high quality building solutions for great architect designs with Smart Steel Buildings, which can be easily installed and re-located. This faster revolutionary construction technique has helped in combining modern designs with speed and strength. With the use of Everest Smart Steel technology, drawing plans can be translated into a ready to erect 3D work within a time period of a few days. These building solutions also provide great resistance to moisture, adverse weather conditions, earthquakes, termites and fire."

"In last two years, EIL has undertaken more than 500 projects in 25 States covering more than 30 million sq ft of built-up area. The projects include a canteen of 10,000 sq ft to a gigantic factory of over 300,000 sq ft. EIL recently completed pre-engineered steel constructions for BP Ergo, RPG Raychem, Honda Siel Cars, Vodafone, MJ Logistics, Priya Gold, SR Industries, Youngman Synthetics, Walmart, PG Electroplast and Koptertek. Everest has a conversion capacity of over 30,000 tpa in the pre-engineered building space. EIL expects over 25% rise in its revenue to more than Rs 200 crore by the end of this fiscal from this vertical.  At the CMP of Rs 117, the share is trading at a P/E of 3.8x on FY12E. We recommend BUY with a target price of Rs 150 at which the share will trade at a P/E of 5.3," says Sunidhi Securities research report.