Buy Gujarat Ambuja; target of Rs 42: Sunidhi Securities

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Buy Gujarat Ambuja; target of Rs 42: Sunidhi Securities

Sunidhi Securities is bullish on Gujarat Ambuja and has recommended buy rating on the stock with a target of Rs 42 in its June 8, 2011 research report.

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Sunidhi Securities is bullish on Gujarat Ambuja and has recommended buy rating on the stock with a target of Rs 42 in its June 8, 2011 research report.

"Incorporated in 1991, GAEL is principally involved in agro-processing & trading and has focused on exports, competing in the global market. Its business segments are agro-processing, which accounted for 67% of total revenues in FY11, cotton yarn (11%), maize processing (21%) and windmills (0.6%). The agro-processing division comprises solvent extraction of edible oilseed and refining, de-oiled cakes (DOC), wheat processing and cattle feed manufacturing. To focus on international trade, it has set up a wholly-owned subsidiary at Singapore."

"With a humble beginning in 1983 and with just a textile processing unit, GAEL has grown with the addition of numerous state-of-the-art- plants in the agro-processing sector. After establishing its first edible oil refinery in 1986, GAEL set up its wheat flour mill and cattle feed mill in 1987. The year 1993-1994 was a crucial period with major projects being taken up like the most modern cotton yarn spinning project and the maize-based starch project. Simultaneously GAEL also set up huge capacities in the solvent extraction industry backed by vertically integrated projects of edible oil refinery and vanaspati ghee."

"GAEL's judicious mix of segments, benchmarking of global standards, high margin maize derivative business with number of downstream applications, increased demand of value added products, further expansion of maize processing, focused approach and fiscal prudence (DER 0.46:1) all point to a brighter prospects.  This new project will help the maize processing division to gain more market share and will help the company by improving overall financial performance.  At CMP of Rs29, the share is trading at a P/E of 3.7x on FY12E and 2.7x on FY13E. We recommend BUY on the stock with a price target of Rs42 in the medium term," says Sunidhi Securities research report.

Public holding more than 90% in Indian cos

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To read the full report click on the attachment