Buy Nitin Fire Protection; target of Rs 50: SKP Securities

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Buy Nitin Fire Protection; target of Rs 50: SKP Securities

SKP Securities is bullish on Nitin Fire Protection and has recommended buy rating on the stock with a target of Rs 50 in its February 16, 2012 research report.

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SKP Securities is bullish on Nitin Fire Protection and has recommended buy rating on the stock with a target of Rs 50 in its February 16, 2012 research report.

"Nitin Fire Protection Industries Ltd (NFPIL) is an end to end solution provider for fire protection, safety and security systems with the capabilities in designing, engineering, commissioning and maintenance. The company's assembling lines are situated at TTC industrial Area, Vashi & Vishakhapatnam, and MIDC, Taloja. Majority of its revenues are generated through its subsidiaries."

"NFPIL has enjoyed the EBIT margin of 14% during FY11 which has further improved to 15.9% in 9MFY12. Margin has improved due to better raw material management, sale of stake in Nitin Cylinders Ltd and its healthy relationship with its esteemed clients. Moreover, we expect the margins to be maintained during the next three years. It is mandatory for the players in fire safety business to have approvals from various domestic and international agencies. NFPIL is the only Indian company to have 36 approvals from Underwriters Laboratories Inc USA/FM/LPCB, UK/VDS. Obtaining these approvals may take time up to 6 years which makes the market conditions favorable for the already established players in the market such as NFPIL."

"At the current market price of Rs 39, the stock is trading at a P/E of 12.3x, 9.2x and 7x of FY12E, FY13E and FY14E earnings of Rs 3.2, Rs 4.2 and Rs 5.6 per share respectively. We recommend BUY rating on the stock with a target price of Rs 50/- (29% upside) at the P/E of 9x on FY14E earnings, over the period of 18 months," says SKP Securities research report.

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