Buy Torrent Power; target of Rs 247: Firstcall Research

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Buy Torrent Power; target of Rs 247: Firstcall Research

Firstcall Research is bullish on Torrent Power and has recommended buy rating on the stock with a target of Rs 247 in its February 7, 2012 research report.

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Firstcall Research is bullish on Torrent Power and has recommended buy rating on the stock with a target of Rs 247 in its February 7, 2012 research report.

"Torrent Power Ltd. is an India-based company engaged in the electricity generation, transmission and distribution. Torrent Power is one of the leading brands in the Indian power sector, promoted by the Rs. 9592 crore Torrent Group. The Torrent Group is a multifaceted and dynamic group, dedicated to transforming life by serving two of its most critical needs - pharma and power. Torrent Power is the most experienced private sector player in Gujarat. Torrent Power foresaw the prospects in the power sector much before the liberalization, when it took-over an ailing power cable company in 1989 (now known as Torrent Cables Limited) and successfully turned it around. The high points of Torrent's foray into power by the acquisitions of two of the India's oldest utilities - The Surat Electricity Company Ltd and The Ahmedabad Electricity Company Ltd. Torrent turned them into first rate power utilities in terms of operational efficiencies and reliability of power supply."

"Torrent Power Ltd. has reported net profit of Rs 2127.60 million for the quarter ended on December 31, 2011 as against Rs. 1975.40 million in the same quarter last year, an increase of 7.70%. It has reported net sales of Rs 18944.50 million for the quarter ended on December 31, 2011 as against Rs 15587.30 million in the same quarter last year, a rise of 21.54%. Total income grew by 21.21% to Rs.19150.10 million from Rs.15799.20 million in the same quarter last year. During the quarter, it reported earnings of Rs 4.50 a share."

"During the quarter, net sales increase by 21.54% to Rs. 18944.50 million from Rs.15587.30 million in the previous quarter and Total Profit for the quarter ended December 2011 was Rs. 2127.60 million grew by 7.70% from Rs. 1975.40 million compared to quarter ended December 2010. The Basic EPS of the company is stood at Rs. 4.50 for the quarter ended December 2011 from Rs. 4.18 for the quarter ended December 2010."

"At the current market price of Rs.219.00, the stock is trading at 8.59 x FY12E and 7.35 x FY13E respectively. Earning per share (EPS) of the company for the earnings for FY12E and FY13E is seen at Rs.25.51 and Rs.29.78 respectively. Net Sales and PAT of the company are expected to grow at a CAGR of 16% and 19% over 2010 to 2013E respectively. On the basis of EV/EBITDA, the stock trades at 4.27 x for FY12E and 3.75 x for FY13E. Price to Book Value of the stock is expected to be at 1.73 x and 1.40 x respectively for FY12E and FY13E. We expect that the company will keep its growth story in the coming quarters also. We recommend 'BUY' in this particular scrip with a target price of Rs 247 for medium to long term investment," says Firstcall Research report. 

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To read the full report click on the attachment