Buy Kansai Nerolac; target Rs 994: Firstcall Research

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Buy Kansai Nerolac; target Rs 994: Firstcall Research

Firstcall Research is bullish on Kansai Nerolac Paints and has recommended buy rating on the stock with a target price of Rs 994 in its February 3, 2012 research report.

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Firstcall Research is bullish on Kansai Nerolac Paints and has recommended buy rating on the stock with a target price of Rs 994 in its February 3, 2012 research report.

"Kansai Nerolac Paints Ltd is the second largest coating company in India and market leader in Industrial Coatings. The Company is a subsidiary of Japan based Kansai Paint Company Limited, which is one of the top ten coating companies in the world. Company's manufacturing units have received ISO 9001-2000, ISO-14001 and OHSAS-18001 for its quality management. Net Sales and PAT of the company are expected to grow at a CAGR of 17% and 18% over 2010 to 2013E respectively. During the quarter, the company has reported Net Profit increased to Rs.571.10 million from Rs.536.10 million in previous year same quarter."

"The company disclosed results for the quarter ended Sep 2011. Net sales for the quarter increased by 15% to Rs.6160.50 million as compared to Rs.5345.10 million during the corresponding quarter last year. During the quarter, the company has reported Net Profit increased to Rs.571.10 million from Rs.536.10 million in previous year same quarter. The Basic EPS of the company stood at Rs.10.60 for the quarter ended Sep 2011."

"At the current market price of Rs.880.00, the stock is trading at 19.38 x FY12E and 17.65 x FY13E respectively. Price to Book Value of the stock is expected to be at 4.01 x and 3.27 x respectively for FY12E and FY13E. Earning per share (EPS) of the company for the earnings for FY12E and FY13E is seen at Rs.45.40 and Rs.49.86 respectively. Net Sales and PAT of the company are expected to grow at a CAGR of 17% and 18% over 2010 to 2013E respectively. During the quarter, the company has reported Net Profit increased to Rs.571.10 million from Rs.536.10 million in previous year same quarter. On the basis of EV/EBITDA, the stock trades at 11.95 x for FY12E and 10.84 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 994 for Medium to Long term investment," says Firstcall Research report.

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To read the full report click on the attachment