Buy Godfrey Phillips; target of Rs 3904: Firstcall Research

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Buy Godfrey Phillips; target of Rs 3904: Firstcall Research

Firstcall Research is bullish on Godfrey Phillips and has recommended buy rating on the stock with a target of Rs 3904 in its September 16, 2011 research report.

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Firstcall Research is bullish on Godfrey Phillips and has recommended buy rating on the stock with a target of Rs 3904 in its September 16, 2011 research report.

"Godfrey Phillips is the one of largest player in the Indian cigarette industry with an annual turnover of over Rs 3000 crores (estimated 2010-11). Incorporated in 1936, Godfrey Phillips has two major stakeholders, the K.K. Modi Group and Philip Morris. The Company's operations primarily span the entire northern and western part of the country with new markets like West Bengal and South of India in its growth plan. Headquartered in Delhi, Godfrey Phillips India today boasts of five manufacturing facilities - located in Ghaziabad (near Delhi), Andheri (Mumbai), Rabale (Mumbai), Baramati (Maharashtra) and Bazpur (U.P.), and a state-of-the-art R&D centre in Mumbai and a tobacco buying unit in Guntur (Andhra Pradesh). The company has a wide network of over 500 distributors and 800,000 retail outlets. Headquarter in Delhi; the company has offices in over 8 locations in India. In India the company operates two manufacturing facilities located in Ghaziabad (near Delhi) and Andheri (Mumbai). These facilities have received ISO 9001:2000 and ISO 14000 certifications for maintaining international quality standards."

"Godfrey Philips India Ltd. has reported net profit of Rs 624.40 million for the quarter ended on June 30, 2011 as against Rs 227.30 million in the same quarter last year, an increase of 174.70%. It has reported net sales of Rs 4365.50 million for the quarter ended on June 30, 2011 as against Rs 3671.20 million in the same quarter last year, a rise of 18.91%. Total income grew by 19.06% to Rs 4402.80 million from Rs.3697.90 million in the same quarter last year. During the quarter, it reported earnings of Rs 60.04 a share."

"At the current market price of Rs.3455.00, the stock is trading at 16.83 x FY12E and 14.70 x FY13E respectively. Earning per share (EPS) of the company for the earnings for FY12E and FY13E is seen at Rs.205.32 and Rs.235.09 respectively. Net Sales and PAT of the company are expected to grow at a CAGR of 14% and 27% over 2010 to 2013E respectively. On the basis of EV/EBITDA, the stock trades at 9.73 x for FY12E and 8.58 x for FY13E. Price to Book Value of the stock is expected to be at 3.59 x and 2.88 x respectively for FY12E and FY13E. We expect that the company will keep its growth story in the coming quarters also. We recommend 'BUY' in this particular scrip with a target price of Rs 3904 for medium to long term investment," says Firstcall Research report.

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To read the full report click on the attachment