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Buy Ispat Industries,target of Rs 37:Mafatlal Securities
Mafatlal Securities has recommended a buy rating on Ispat Industries with a target price of Rs 37. At current market price of 24.35 the scrip discounts its FY09 earnings of Rs 2.12 per share by 11.49 times and its estimated FY10 earnings of Rs 2.90 per share by 8.40 times which is attractive.
Mafatlal Securities has recommended a buy rating on Ispat Industries with a target price of Rs 37 in its September 5, 2008 research report. "At current market price of 24.35 the scrip discounts its FY09 earnings of Rs 2.12 per share by 11.49 times and its estimated FY10 earnings of Rs 2.90 per share by 8.40 times which is attractive. Stock is trading at EV/EBITDA multiple of 4.94 for FY09 and 4.41 for FY10, whereas all its peers are valued at near 6x EV/EBITDA ratio, indicating the underlying potential for price revision. It has favorable Market capitalization to Sales of 0.36 when compared to Industry Peers with average Market capitalization to sales of 1.16."
"With attractive OPM of 17-18% (without captive mines) and M-cap/Sales ratio, present valuation of the scrip looks fair with strong potential to reach higher level. We recommend a 'BUY' on Ispat Industries Ltd. with a price target of Rs 37 and an investment horizon of one year, an upside of 50% from current level," says Mafatlal Securities' research report.
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