Buy INEOS ABS; target of Rs 661: Firstcall Research

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Buy INEOS ABS; target of Rs 661: Firstcall Research

Firstcall Research is bullish on INEOS ABS and has recommended buy rating on the stock with a target of Rs 661 in its September 27, 2011 research report.

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RELATED NEWS Buy Gujarat Pipavav Port; target of Rs 79: BP Equities Hold Kajaria Ceramics; target of Rs 120: Sushil Finance Buy Varun Industries; target Rs 285: Firstcall Research ALSO READ See previous views by Firstcall Research See what other Experts & Brokerages are saying about INEOS ABS See messages about INEOS ABS INEOS ABS BSE | NSE 31/05/12 Are Mutual Funds betting on INEOS ABS?

Firstcall Research is bullish on INEOS ABS and has recommended buy rating on the stock with a target of Rs 661 in its September 27, 2011 research report.

"Incorporated as ABS Plastics Limited in the year 1973 then changed its name to ABS Industries Limited. The erstwhile ABS Industries Limited now INEOS ABS (India) Limited (the 'Company') w.e.f. June 17, 2008, is a pioneer in developing the market for the versatile engineering thermoplastic material - Acrylonitrile Butadiene Styrene (ABS) in India, when it started its operation in 1978 by manufacturing and marketing ABS polymer under the brand name of ABSOLAC. The company also set up India's first modern and dedicated Styrene Acrylonytrile (SAN) plant in 1993, with technical know-how from M/s JSR, Japan for manufacture of various grades of ABSOLAN - SAN. In early 1997, Bayer Industries Private Limited, a 100% holding company of the German major, Bayer AG acquired a majority share of 51% in ABS Industries Limited. The company then became a part of the Bayer group and was rechristened as "Bayer ABS Limited"."

"INEOS ABS (India) Ltd disclosed a marginal increase in standalone profit for the quarter ended June, 30 2011. During the quarter, the profit of the company surged 9.36% to Rs 158.45 million from Rs 144.89 million in the same quarter last year. Net sales for the quarter rose 14.74% to Rs 2062.97 million, while total income for the quarter rose 15.69% to Rs 2090.27 million, when compared with the prior year period. It posted earnings of Rs 9.01 a share during the quarter, registering 9.36% increase over prior year period."

"At the current market price of Rs 585, the stock is trading at 13.14 x CY11E and 11.65 x CY12E respectively. Earning per share (EPS) of the company for the earnings for CY11E and CY12E is seen at Rs. 44.53 and Rs. 50.21 respectively. Net Sales and PAT of the company are expected to grow at a CAGR of 20% and 22% over 2009 to 2012E respectively. On the basis of EV/EBITDA, the stock trades at 7.89 x for CY11E and 7.03 x for CY12E. Price to Book Value of the stock is expected to be at 2.49 x and 2.05 x respectively for CY11E and CY12E. 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 661 for medium term investment," says Firstcall Research report.

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To read the full report click on the attachment