Buy Grasim; target of Rs 2789: Firstcall Research

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Buy Grasim; target of Rs 2789: Firstcall Research

Firstcall Research is bullish on Infosys and has recommended buy rating on the stock with a target of Rs 2789 in its January 13, 2012 research report.

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Firstcall Research is bullish on Infosys and has recommended buy rating on the stock with a target of Rs 2789 in its January 13, 2012 research report.

"Grasim Industries Limited, a flagship company of the Aditya Birla Group, ranks among India's largest private sector companies, with consolidated net revenue of Rs.202 billion. Starting as a textiles manufacturer in 1948, today Grasim's businesses comprise viscose staple fibre (VSF), cement, chemicals and textiles. Its core businesses are VSF and cement, which contribute to over 90 per cent of its revenues and operating profits. The Aditya Birla Group is the world's largest producer of VSF, commanding a 21 per cent global market share. Grasim, with an aggregate capacity of 333,975 tpa has a global market share of 10 per cent. It is also the second largest producer of caustic soda (which is used in the production of VSF) in India. In cement, Grasim through its subsidiary UltraTech Cement Limited ("UltraTech") has a capacity of 52 million tpa and is a leading player in India. In July 2004, Grasim acquired a majority stake and management control in UltraTech. One of the largest of its kind in the cement sector, this acquisition catapulted the Aditya Birla Group to the top of the league in India."

"Grasim Industries Ltd disclosed results for the quarter ended Sep 2011. Net sales for the quarter moved up 28% to Rs.57741.30 million as compared to Rs.45034.30 million during the corresponding quarter last year. During the quarter, the company has reported Net Profit increased to Rs.4179.40 million from Rs.3233.60 million in previous year same quarter. The Basic EPS of the company stood at Rs.45.57 for the quarter ended Sep 2011."

"At the current market price of Rs.2470.00, the stock is trading at 8.24 x FY12E and 7.13 x FY13E respectively. Price to Book Value of the stock is expected to be at 1.25 x and 1.03 x respectively for FY12E and FY13E. Earning per share (EPS) of the company for the earnings for FY12E and FY13E is seen at Rs.297.42 and Rs.343.81 respectively. The Company core businesses are VSF and cement, which contribute to over 90 per cent of its revenues and operating profits. Grasim has grown to become a leading cement player in India. Grasim, with an aggregate capacity of 333,975 tpa has a global market share of 10 per cent. It is also the second largest producer of caustic soda (which is used in the production of VSF) in India."

"Net Sales and PAT of the company are expected to grow at a CAGR of 13% and 5% over 2010 to 2013E respectively. On the basis of EV/EBITDA, the stock trades at 3.49 x for FY12E and 3.11 x for 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 2789 for medium to long term investment," says Firstcall Research report. 

Institutional holding more than 40% in Indian cos

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To read the full report click on the attachment