Buy Morganite Crucible; target of Rs 595: Sunidhi Sec

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Buy Morganite Crucible; target of Rs 595: Sunidhi Sec

Sunidhi Securities is bullish on Morganite Crucible and has recommended buy rating on the stock with a target of Rs 595 in its September 26, 2011 research report.

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Sunidhi Securities is bullish on Morganite Crucible and has recommended buy rating on the stock with a target of Rs 595 in its September 26, 2011 research report.

"MCIL (earlier known as Greaves Morganite) started operating in 1986 at Aurangabad, Maharashtra, in collaboration with Morganite Crucibles, U.K., one of the largest manufacturers of Resin Bonded Silicon Carbide Crucibles in the world. The plant at Aurangabad is equipped with the most modern processing facilities and state-of-the-art technology based on environment friendly resin bonding. With international quality standards the plant also has an ISO 9002 certification to its credit. Exports comprise over 60% of sales."

"MCIL, which manufactures resin-bonded silicon carbide crucibles and clay graphite crucibles, caters to the non-ferrous metal industry. The name of the company was changed to the present one upon buying Greaves' stake of 25.5% in FY05-06. Morgnaite Crucibles, UK (MCL, UK) along with its associates Morgan Terrassen BV holds 75% stake in the company. Diamond Crucible Co India located at Mehsana, Gujarat is its 51% subsidiary. MCIL has full access to information on the global developments in the areas of Silicon Carbide and Clay Graphite Crucibles through Morgan's global presence and also has access to all the research and technology developments undertaken by MCIL in this regard. This gives edge on MCIL's competitors in India. With the growth in the automobile sector, the requirements of Crucibles are expected to grow and this will be a good opportunity to accelerate MCIL's growth. The overall sectorial portfolio is very balanced. Looking ahead, the business is expected to see improved demand conditions driven by increased growth in the metal and auto parts Industry."

"MCIL's's key growth opportunities are driven by multiple end-use markets. These include non-ferrous castings for the automotive, marine and rail markets and the recycling and refining of precious metals from mining projects, the production of pure aluminium for electronics applications. MCL, UK's Morgan Engineered Materials division benefits from a strategically located low-cost manufacturing base, with sites in Mexico, China, Hungary and India that allow the division to serve customers across the globe. The parent's strategy is explicitly focused on leveraging the significant growth opportunities in the most dynamic economies of the world such as China, India, South America and the Middle East as they rapidly develop their own capabilities and domestic markets."

"MCIL is expected to post consolidated EPS of Rs 33.9 in FY12. At the CMP of Rs 375, the share is trading at a P/E of 11.1. We recommend BUY with a target price of Rs 595 at which the share will trade at a P/E of 17.5," says Sunidhi Securities research report.

Institutional holding more than 40% in Indian cos

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To read the full report click on the attachment