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Buy Godawari Power, target of Rs 260: Karvy
Karvy Stock Broking has recommended a buy rating on Godawari Power & Ispat (GPIL) with a 12-month target price of Rs 260. The research firm expects net profit to record a CAGR of 31% on net sales CAGR of 37% over the next three years (FY08-10E).
Karvy Stock Broking has recommended a buy rating on Godawari Power & Ispat with a 12-month target price of Rs 260 in its September 5, 2008 research report. "We expect net profit to record a CAGR of 31% on net sales CAGR of 37% over the next three years (FY08-10E). ROCE is estimated to be 24% and ROE is expected to be 29% in FY09 and FY10. At the current price, the stock is trading at 4.3x FY09E and 3.3x FY10E earnings. However, the P/E band suggests that GPIL has been trading above 4.5x its current year earnings."
"The stock is available at an EV/EBIDTA of 4.1x FY09E and 3.2x FY10E. Currently, it is at 1.1x FY09E BV and 0.9x FY10E BV. We believe that GPIL is available at an attractive valuation; hence, we recommend this stock as a BUY with a 12-month price target of Rs 260 per share, a potential upside of 30%. Our target price is based on 4.3x FY10E EPS, 1.1x FY10E BV and 4x FY10E EBITDA," says Karvy's research report.
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