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Buy Grasim Industries, target of Rs 2943: Karvy
Karvy Stock Broking has recommended a buy rating on Grasim Industries with a target price of Rs 2943. For the quarter ended June 2008, Karvy expects the company would report a net sales growth of 8.8% to Rs 44.3 billion.
Karvy Stock Broking has recommended a buy rating on Grasim Industries with a target price of Rs 2943 in its July 24, 2008 research report. "For the quarter ended June 2008, we expect the company would report a net sales growth of 8.8% to Rs 44.3 billion mainly on account of higher cement realisation. We expect EBIDTA margin would depress by 530bps to 25.9% in Q1FY09 from 31.2% in Q1FY08 and EBIDTA would go down by 9.7% to Rs 11.4 billion in Q1FY09E due to higher raw material cost and coal price and increase in freight rate. PAT would go down by 12% to Rs 7.03 billion in Q1FY09E from Rs 7.99 billion in Q1FY08."
"At the current market price of Rs 1820, the company is trading at PER multiple of 7x and EV/EBIDTA multiple of 3.4x on FY10E earning. Looking at volume growth in cement and VSF business, reduction in operational cost and attractive valuation; we believe it is providing a good investment opportunity for long term investors. We rate the company as a BUY with a price target of Rs 2943 based on our SOTP valuation," says Karvy's research report.
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