Buy Todays Writing, target of Rs 201: IL&FS Investsmart

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Buy Todays Writing, target of Rs 201: IL&FS Investsmart

IL&FS Investsmart has maintained its buy rating on Todays Writing with a target price of Rs 201. Todays Writing Products Limited’s (TWPL’s) Q4FY08 results were in line with research firm's expectations. During Q4FY08, TWPL registered a 14% QoQ increase in its topline, driven by strong export growth and stable domestic demand.

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IL&FS Investsmart has maintained its buy rating on Todays Writing with a target price of Rs 201 in its May 6, 2008 research report. "Todays Writing Products Limited's (TWPL's) Q4FY08 results were in line with our expectations. During Q4FY08, TWPL registered a 14% QoQ increase in its topline, driven by strong export growth and stable domestic demand. On a YoY basis, TWPL's margins increased by a sharp 220bps to 12.6%. The margins, however, remained subdued on a QoQ basis due to increase in cost of raw materials that the company was unable to fully pass on to the customers.The company is currently consolidating its business, both in the writing products segment and in its subsidiaries namely, Todays Stationery Mart Limited (TSML) and Todays Petrotech Limited (TPL)."

"We expect the company's sales and net profits to grow at a CAGR of 33% and 44% during FY07-10, to stand at Rs 6.1 billion and Rs 506 million in FY10E, respectively. The recent fall in the stock market has led to a significant correction in the stock price, notwithstanding any change in fundamentals of the company. Consequently, the company is trading at an attractive valuation of 2.9x its FY09E EPS of Rs 24.8, and 1.8x its FY10E EPS of Rs.39.6. Therefore, we retell our 'Buy' rating on TWPL with a target price of Rs 201," IL&FS Investsmart's research report.

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