Buy TIL; target of Rs 720: Sunidhi Securities

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Buy TIL; target of Rs 720: Sunidhi Securities

Sunidhi Securities is bullish on TIL and has recommended buy rating on the stock with a target of Rs 720 in its April 21, 2011research report.

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Sunidhi Securities is bullish on TIL and has recommended buy rating on the stock with a target of Rs 720 in its April 21, 2011research report.

"TIL is the exclusive dealer for Caterpillar products in North and East India, Bhutan and Nepal and effective 2nd April, 2010, its business of construction, mining and power systems operates under Tractors India Pvt Limited [TIPL] - a wholly owned subsidiary of TIL. The construction and mining business sells and services a wide portfolio of Caterpillar range of construction/mining equipment. TIL brings the world class service solutions like maintenance and repair contract [MARC], component rebuild center [CRC] and schedule oil analysis [SOS] as well as the global concept of providing equipment on rent for construction, mining and power applications. TIL is a leader in truck mounted cranes with a market share of exceeding 60%. TIL's products find application in road development, port infrastructure, irrigation and power, mining and other ancillary industries."

"To avail of cutting edge technologies, TIL has several long-term technical and strategic alliances with leading global equipment manufacturers like Caterpillar Inc, Grove Worldwide USA, Manitowoc Crane Group - USA, Paceco Corp - USA (a part of Mitsui Engineering and Shipbuilding - Japan), FAMAK - SA, Poland. TIL operates through a three strategic business groups-the material handling group, construction equipment group and power systems group. During Q3FY11 ended December 31, 2010, PBIDT and net profit stood at Rs 33.5 crore an Rs 15.5 crore respectively on sales of Rs 394.5 crore. EPS for Q3FY11 stood at Rs 15.5. During 9M FY11, PBIDT and net profit stood at Rs 85 crore and Rs 40 crore respectively on sales of Rs 1020 crore. EPS for 9M FY11 works out to Rs 39.9."

"TIL's investment in material handling solutions at Khadagpur in West Bengal is in progress and is expected to be completed by FY12. Management expects to generate revenues to the tune of Rs 200 crore in its first full year of completion. TIL's strong product portfolio, focus on regional markets, increasing market coverage, initiatives to strengthen the customer base coupled with increasing focus of Government on the infrastructure spend give good visibility to revenue going forward. TIL is likely to post an EPS of Rs 59 in FY11 and Rs 72 in FY12. At the CMP of Rs 555, the share is trading at a P/E of 9.5x on FY11E and 7.7x on FY12E. We recommend BUY with a target of Rs 720 in the medium term," says Sunidhi Securities research report.

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To read the full report click on the attachment