Buy Everest Industries; target of Rs 211: Dolat Capital

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Buy Everest Industries; target of Rs 211: Dolat Capital

Dolat Capital is bullish on Everest Industries (EIL) and has recommended buy rating on the stock with a target price of Rs 211 in its October 19, 2011 research report.

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Dolat Capital is bullish on Everest Industries (EIL) and has recommended buy rating on the stock with a target price of Rs 211 in its October 19, 2011 research report.

"Everest Industries, Top line growth at 28% YoY better than estimates, EBIDTA margin was lower and PAT margin was in line with estimates Everest Industries (EIL) Q2FY12 revenue and PAT numbers were better than estimates; however, EBITDA was in line with estimates. Building Products segmented reported higher than estimated revenue numbers. EBIDTA and PAT margins were lower than estimates by 60 bps at 7.2% and by 20 bps at 3.2% respectively. Top line grew by 28% YoY to Rs 1846 mn (Dolat Est: Rs 1675 mn). EBITDA grew by 10% YoY to Rs 133 mn. (Dolat Est: Rs 131 mn). Reported PAT grew by 30% YoY to Rs. 60 mn (Dolat Est: Rs 57 mn). There was forex loss of Rs 23 mn in the corresponding quarter last year. Adjusted for that, PAT has registered a decline of 13% YoY. Building Products segment contributed 75% of the total revenue has grown by 22% YoY to Rs 1393 mn (Dolat Est: 1216 mn). Steel Buildings segment contributed remaining 20% and has grown 48% YoY to Rs 465 mn (Dolat Est: Rs 454 mn).

EBIDTA margin declined by 121 bps YoY to 7.2%. It was also lower by 60 bps against our estimate of 7.8%, mainly due to higher than estimated other expenditure. On segmental margins front - Building products segmental margin register decline of 649 bps YoY to 7.2% (Dolat Est: 8.6%). Steel Buildings segment has reported positive EBIT with margin of 5.7% (Dolat Est: 6%) as against loss of same period last fiscal. The PAT margin for the quarter was same as that of corresponding quarter last fiscal at 3.2%. Absence of forex loss (Last fiscal- Forex loss Rs 23 mn) has allowed EIL to recover YoY loss of 121 bps in EBIDTA margin in the quarter under review. Reported PAT grew by 30% YoY. However, adjusted for forex loss of last year, it has declined by 13% YoY.

EIL has reported better than estimated revenue numbers for Building Products segment in a seasonally weakest quarter of the fiscal. The Steel Buildings segment has turned around and started delivering positive EBIT since past four quarters. This segment has an order backlog of Rs 1.7 bn ensure revenue visibility. We continue to remain positive on the stock. At CMP of Rs 161, the stock trades at 4.5x its FY12E earnings and 4.7x FY13E earnings. We recommend BUY on the stock with a target price of Rs 211 (6xFY13E earnings)," says Dolat Capital research report.

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