Buy Nandan Denim; target of Rs 67: Firstcall

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Firstcall Research report on Nandan Denim

"Nandan Denim has achieved a turnover of Rs. 2769.42 million for the 2nd quarter of the current year 2014-15 as against Rs. 2290.18 millions in the corresponding quarter of the previous year. EBITDA of Rs. 445.03 million in Q2 FY15 and increase of 19.12% against the corresponding period of last year. In Q2 FY15, net profit of Rs. 119.59 million against Rs. 82.60 million in the corresponding quarter of the previous year. The company has reported an EPS of Rs. 2.63 for the 2nd quarter as against an EPS of Rs. 1.81 in the corresponding quarter of the previous year."

At the current market price of Rs. 55.50, the stock P/E ratio is at 4.97 x FY15E and 3.99 x FY16E respectively.

Earning per share (EPS) of the company for the earnings for FY15E and FY16E is seen at Rs.11.17 and Rs.13.89 respectively.

Net Sales and PAT of the company are expected to grow at a CAGR of 23% and 27% over 2013 to 2016E respectively.

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On the basis of EV/EBITDA, the stock trades at 3.66 x for FY15E and 3.04 x for FY16E.

Price to Book Value of the stock is expected to be at 0.97 x and 0.78 x respectively for FY15E and FY16E.

"We expect that the company surplus scenario is likely to continue for the next three years, will keep its growth story in the coming quarters also. We recommend ‘BUY’ in this particular scrip with a target price of Rs 67 for Medium to Long term investment", says Firstcall Research Report.

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