Buy Prakash Industries; target of Rs 96: Angel Broking

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Buy Prakash Industries; target of Rs 96: Angel Broking

Angel Broking is bullish on Prakash Industries and has recommended buy rating on the stock with a target of Rs 96 in its May 30, 2011 research reports.

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RELATED NEWS Reduce NMDC; target of Rs 241: Angel Broking Buy Cairn India; target of Rs 392: LKP Hold Orbit Corp; target of Rs 50: PINC Research ALSO READ See previous views by Angel Broking See what other Experts & Brokerages are saying about Prakash Ind See messages about Prakash Ind Prakash Ind BSE | NSE 31/05/12 Are Mutual Funds betting on Prakash Ind?

Angel Broking is bullish on Prakash Industries and has recommended buy rating on the stock with a target of Rs 96 in its May 30, 2011 research reports.

"For 4QFY2011, Prakash Industries' (PIL) net sales declined by 14.6% yoy to Rs 396cr on account of lower sales volume despite higher realisation. The company had taken maintenance shutdown in its sponge iron segment during the quarter. In 4QFY2011, PIL sold 30mn units of power to Chhattisgarh State Electricity Board (CSEB) and 3kt of sponge iron (nil in 4QFY2010). Billet sales stood at 5kt and wire rod sales fell by 30.1% yoy to 76kt. PIL has resumed TMT bar operations from January and sold 13kt in 4QFY2011."

"For 4QFY2011, PIL's EBITDA margin remained flat yoy at 21.4%, while EBITDA fell by 14.2% yoy to Rs85cr. There was a gratuity provision during the quarter, which resulted in higher staff cost. Further, interest expenses declined by 72.9% yoy to Rs2cr as the company repaid loan last year, while other income increased to Rs5cr due to export of iron ore fines. Thus, net income fell by 2.2% yoy to Rs72cr during the quarter. PIL has delayed the commissioning of the first 125MW unit (5x25MW) to September 2011 (earlier June 2011). The 0.2mn tonne sponge iron expansion has also been delayed again by three months to 2QFY2012."

"We expect PIL's EBITDA to witness strong growth over the coming five years as the benefits of increased capacities of sponge iron and power commence production. PIL is currently trading at 3.2x and 2.8x FY2012E and FY2013E EV/EBITDA, respectively. On P/B basis, it is trading at 0.4x and 0.3x FY2012E and FY2013E, respectively. We maintain our Buy recommendation on the stock with a revised target price of Rs 96 (earlier Rs 115), valuing the stock at 3.5x FY2013E EV/EBITDA," says Angel Broking research report. 

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