Buy Grasim Industries; target Rs 2,666: Motilal Oswal

13896 Investors following Grasim. Share this News with them.

0

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

Buy Grasim Industries; target Rs 2,666: Motilal Oswal

Motilal Oswal is bullish on Grasim Industries and has recommended buy rating on the stock with a target price of Rs 2,666 in its January 25, 2012 research report.

Post your opinion here

 

0

Tweet

Share on Tumblr

RELATED NEWS Buy Larsen and Toubro; target of Rs 1380: Motilal Oswal Accumulate NHPC; target of Rs 22: PLilladher Hold KPIT Cummins Infosystems; target Rs 190: Nirmal Bang ALSO READ See previous views by Motilal Oswal See what other Experts & Brokerages are saying about Grasim See messages about Grasim Grasim BSE | NSE 31/05/12 Are Mutual Funds betting on Grasim?

Motilal Oswal is bullish on Grasim Industries and has recommended buy rating on the stock with a target price of Rs 2,666 in its January 25, 2012 research report.

"Grasim Industries' 3QFY12 standalone numbers were lower than our expectations, impacted by ~8% YoY decline in VSF volumes. EBITDA for the quarter was INR2.8b (v/s our estimate of INR3.46b) and EBITDA margin was 22.7% (v/s our estimate of 26.4%). Net sales grew 2% YoY to INR12.4b (our estimate: INR13.1b), EBITDA was up 23% YoY at INR2.8b and PAT declined 3% YoY to INR2.75b. EBITDA margin declined 720bp YoY (~140bp QoQ) to 22.7% (our estimate: 26.4%)."

"VSF business volumes were 78,215 tons (lower than our estimate of 88,520 tons), impacted by cautious approach adopted by the value chain due to global economic uncertainties. While VSF realizations at INR128/kg were in-line, lower than estimated volumes and higher cost push resulted in lower than expected PBITDA margin at 25.6% (our estimate: 29.1%). The management indicated that the unprecedented volatility in the VSF business over the last few quarters is likely to remain, as both competing fabrics - cotton and polyester - are witnessing high volatility. While demand at the retail level is holding up, demand from the chain has been muted in 3QFY12 and is now picking up in January 2012."

"We downgrade our consolidated EPS estimates by 2.4% to INR293 for FY12 and by 3.6% to INR345 for FY13 to factor in lower volumes and higher cost push. The stock trades at 7.2x FY13E consolidated EPS and an EV of 4.5x FY13E EBTIDA; implied valuation for the cement business is USD78/ton. Maintain Buy with an SOTP-based target price of INR 2,666," says Motilal Oswal research report.

What stocks does Citi hold?

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies 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