Buy SRF Polymers: Edelweiss Research

286 Investors following Kama Holdings. Share this News with them.

0

Like this story, share it with millions of investors on M3

Buy SRF Polymers: Edelweiss Research

Broking house, Anand Rathi is bullish on SRF Polymers and has recommended buy rating on the stock.

Post your opinion here

 

0

Tweet

Share on Tumblr

RELATED NEWS Buy Thermax with a target of Rs 427: P-Sec Accumulate Lupin with a target of Rs 600: P-Sec Buy Tata Consultancy Services; target of Rs 1325: Sharekhan Accumulate Bajaj Auto; target of Rs 3033: Emkay Reliance Comm an outperformer: CLSA BSE | NSE 01/01/70 Are Mutual Funds betting on ?

Broking house, Anand Rathi is bullish on SRF Polymers and has recommended buy rating on the stock.

Anand Rathi report on SRF Polymers

Investment Play

"SRF Polymers is primarily involved in the business of fishnets and engineering plastics. The engineering plastics business caters to nylon engineering plastic requirement of companies in the auto, consumer durable and other sectors. Fishnets are a niche segment and SRF is a dominant player in this segment with strong distribution network. With recent fall in oil prices, the pressure on input cost will be over and company may report better margins from coming quarters. Company is expanding capacities in fishnet [at Manali] and enqq. plastic [in Uttaranchal] divisions."

"What excites us however is the fact that SRF Polymer directly and through its subsidiaries, hold 42.4 percent stake in SRF. At  current price of SRF, the value of investment alone works out to Rs 888 per share for SRF Polymer. It is normal for investment companies to trade at a discount of around 50 percent of the value. Even assuming a discount of 50  percent, SRF Polymers should fetch a price of Rs 444 per share against current price of just around Rs 157. This too is without  considering the core business of Fishnets and Engg plastics, where in also the growth prospectus and outlook is now better."

"So its a superb value pick with enough potential to appreciate from the current levels. Other way of looking at this opportunity  is, one can buy the SRF stock through this route at less then one fifth cost or at less then Rs 40/-. Still other way of looking at it  is, - one is buying 42.5% stake in SRF with Market of of Rs 1350 crore [so, 42.5% of this is worth Rs 573 crore] for just Rs 100 crore  through this route. BUY."