Buy Manaksia; target of Rs 140: Sunidhi Sec

ALSO READ See previous views by Sunidhi Securities See what other Experts & Brokerages are saying about Manaksia See messages about Manaksia Manaksia BSE | NSE 09/02/12 Are Mutual Funds betting on Manaksia?

Sunidhi Securities is bullish on Manaksia and has recommended buy rating on the stock with a target of Rs 140.

"Manaksia claims to be the largest player in secondary aluminium rolling in India.  Going forward, the company plans to focus on its metal business, which mainly consists of steel and aluminium-rolled products. This would give the company economies of scale and helps it to reduce raw material costs, thereby resulting in  steady operating margins. A diverse product portfolio and wide geographical reach,  both domestically and internationally, has helped the company to significantly derisk  its business."

"Manaksia is currently in an equity reduction plan, with an outlay of Rs 50 crore for a maximum of 40 lakh shares at a price not exceeding Rs 200 per share other than from promoters. The buyback at an assumed average price of Rs 110/share would reduce its equity to Rs 13.1 cr. at a cost of Rs 44 crore.  The outlook for metal industry globally is bright. Sustained growth is expected  across all key segments aided by several factors such as growing demand,  investment in capacity addition, increasing supply deficit in certain countries and  favorable government regulations. With the green shoots visible in the Indian and  the world economies, the company is poised to take advantage of the growths in the  specific sectors of construction, automobile and consumer goods.  Manaksia is likely to post an EPS of Rs 23.5 in FY11 and Rs 26.3 in FY12. At the  CMP of Rs 110, the share is trading at a P/E of 4.7x on FY11E and 4.2x on FY12E.  We recommend BUY with a target of Rs 140 in the medium term."

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