Buy Lanco Industries; target of Rs 75: Firstcall Research

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Buy Lanco Industries; target of Rs 75: Firstcall Research

Firstcall Research is bullish on Lanco Industries and has recommended buy rating on the stock with a target of Rs 75 in its November 1, 2010 research report.

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Firstcall Research is bullish on Lanco Industries and has recommended buy rating on the stock with a target of Rs 75 in its November 1, 2010 research report.

"Lanco Industries Limited engages in the manufacture and sale of pipes in India and internationally. We initiated coverage of Lanco Industries Ltd and set a target price of Rs 75.00 for medium to long term. The unit is located at Rachagunneri Village on Tirupathi, Srikalahasthi road which is about 30 km from Tirupathi and 10 km from Srikalahasthi. The company provides ductile iron pipes and spun pipes that are used for water supply, sanitation,

and water and sewerage transportation. The company's net sales and net profit are expected to grow at a CAGR of 5% and 59% over FY09 to FY12E."

"For the Second quarter, the top line of the company decreased 2%YoY and stood at Rs 1720.68 million against Rs 1759.04 million of the same period of the last year. The bottom line of the company for the quarter stood at Rs 204.29 million from Rs 152.81 million of the corresponding period of the previous year i.e. a increase of 34%YoY."

"At the market price of Rs 60.05, the stock is trading at 3.62 x and 3.26 x for FY11E and FY12E respectively. On the basis of EV/EBDITA, the stock trades at 1.97 x for FY11E and 1.77 x for FY12E. Price to book value of the company is expected to be at 0.98 x for FY11E and 0.76 x for FY12E respectively. EPS of the company is expected to be at Rs 16.58 and Rs 18.44 for the earnings of FY11E and FY12E respectively. The company's net sales and net profit are expected to grow at a CAGR of 5% and 59% over FY09 to FY12E. We recommend 'BUY' in this particular scrip with a target price of Rs 75 for medium to long term investment," says Firstcall Research report.

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To read the full report click on the attachment