Buy Gwalior Chemical, target of Rs 107: Angel

Angel Broking has maintained its buy rating on Gwalior Chemical Industries with a target price of Rs 107 in its May 28, 2008 research report. "During 4QFY2008, Gwalior Chemical Industries (GCIL) recorded 48.3% yoy jump in revenues to Rs 85.7 crore (Rs 57.8 crore), which was better than our expectation. Other Income, which was up 116% yoy to Rs 1.0 crore (Rs 0.5 crore), helped to partially mitigate the impact on OPMs. But, gratuity provisioning of additional Rs 0.66 crore hit the PAT. Overall, PAT went up by 37.6% yoy to Rs 6.8 crore (Rs 4.9 crore), which was marginally below our expectation. However, excluding the gratuity provisioning, PAT was up a healthy 51.1% yoy to Rs 7.4 crore."

"GCIL has been able to pass on the steep increase in the raw material prices to its customers. Hence, we expect marginal expansion in OPMs FY2009 onwards. We believe the company will be able to deliver a consistent 25-30% growth in Earnings over  the next couple of years and hence remain positive over its growth prospects. The stock is currently available at attractive valuations of 3.9x FY2010E EPS of Rs 19.5 and FY2010E P/BV of 0.7x. We maintain a Buy, with a target price of Rs 107," says Angel's research report.

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