Buy Pennar Industries; target of Rs 51: Karvy

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Karvy Stock Broking is bullish on Pennar Industries and has recommended buy rating on the stock with a target of Rs 51.

"At the current market price, Pennar Industries is trading at 11x FY09 EPS, 9x FY10E EPS and 6x FY11E EPS. Also, the current price discounts a book value of 2.2x FY09, 1.8x FY10E and 1.4x FY11E. On EV/EBITDA basis, the stock is available at 7.3x FY09, 5.6x FY10E and 4.1x FY11E. At the current price, the stock is likely to give a dividend yield of ~3% in FY10E and FY11E."

"Considering the historical P/E band and blended earnings multiple, we arrive at a target price of Rs 51/share for PIL (based on 8.5x FY11E EPS), a potential upside of 45% from current levels, representing 5.5x EV/EBITDA and 2x FY11 BV. Accordingly, we upgrade the stock rating from Underperformer to BUY with a 12-month price target of Rs 51 per share, " says Karvy Stock Broking research report.

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