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Buy TRF: Edelweiss
Edelweiss has maintained its buy rating on TRF. TRF’s standalone Q4FY08 numbers were significantly higher than research firm's expectations on the EBITDA and PAT margin fronts, but disappointing in terms of revenue growth.
Edelweiss has maintained its buy rating on TRF in its May 20, 2008 research report. "TRF's standalone Q4FY08 numbers were significantly higher than our expectations on the EBITDA and PAT margin fronts, but disappointing in terms of revenue growth. While revenue growth for the quarter increased 20% to Rs 1,697 million, EBITDA grew 51% to Rs 236 million on the back of EBITDA margins increasing 290bps Y-o-Y to 13.9%. For the full year, EBITDA grew 56% on the back of margins improving 460bps Y-o-Y. PAT for the quarter grew 58% to Rs 158 million."
"At CMP of Rs 1,145, TRF is trading at 10.6x FY09E and 8x FY10E earnings. However, our earnings estimates do not factor in potential acquisitions that the company is pursuing currently to diversify in to other related areas. Currently, TRF is a major play on the upcoming thermal and ultra mega watt power projects and expansions in the port segment. Further, we remain overweight on TRF bagging coal-handling packages for the upcoming Tata Power Ultra Mega Power Project at Mundra and other power projects announced by them. With a 39% EPS CAGR during FY08-10E, we continue to maintain our 'BUY' recommendation," says Edelweiss' research report.
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