Buy United Phos; target of Rs 222: Sharekhan

11748 Investors following United Phos. Share this News with them.

0

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

Buy United Phos; target of Rs 222: Sharekhan

Sharekhan is bullish on United Phosphorous and has recommended buy rating on the stock with a target of Rs 222 in its August 25, 2011 research report.

Post your opinion here

 

0

Tweet

Share on Tumblr

RELATED NEWS Buy Supreme Infra; target of Rs 293: BP Equities Accumulate Rallis India; target of Rs 204: JRG Securities Sell Dena Bank Fut below Rs 82: IIFL ALSO READ See previous views by Sharekhan See what other Experts & Brokerages are saying about United Phos See messages about United Phos United Phos BSE | NSE 29/05/12 Are Mutual Funds betting on United Phos?

Sharekhan is bullish on United Phosphorous and has recommended buy rating on the stock with a target of Rs 222 in its August 25, 2011 research report.

"United Phosphorous Ltd (UPL)'s top line growth moderated to 6.3% year on year (YoY) to Rs5,804.5 crore largely on account of a revenue decline in the European market (which contributes around 21% to the consolidated revenues) and a lower single-digit growth in North America (which contributes around 22% to the top line). The 180-basis-point year-on-year (Y-o-Y) improvement in the operating profit margin (OPM; to 20.7%) and a higher other income led to an 8.9% Y-o-Y increase in the bottom line to Rs585.8 crore."

"The net operating cash flow declined to Rs814.8 crore in FY2011 from Rs1,293.59 crore in FY2010. The decline in the operating cash flow was mainly due to an increase in debtors as well as inventories during year. The debtor days and inventory days increased by 12 days and 22 days respectively affecting the working capital cycle of the company. The working capital days increased by 15 days to 68 days in FY2011. The inventory and debtors increased largely due to a reconciliation of the inventory in one of the subsidiaries mainly due to a difference in the physical verification and records. The company has a favourable debt-equity ratio of 0.2x. As on March 31, 2011 its net debt position was Rs926 crore, an increase of Rs122 crore as compared to that in March 31, 2010. The net debt increased mainly due to the acquisition of Rice Co LLC during the year. During FY2011 it converted foreign currency convertible bonds (FCCBs) worth $65.4 million into 2.224 crore of equity shares having a conversion price of Rs132 per share. The conversion of FCCBs into equity shares resulted in an increase in the share capital to Rs92.4 crore from Rs87.9 crore earlier. Hence the debt-equity ratio slightly improved from 0.3x in FY2010 to 0.2x in FY2011."

"We expect the top line and the bottom line of UPL to grow at CAGR of 14.8% and 19.0% respectively over FY2011-13. This will be on the back of a good operating performance by most of the geographies (except for Europe). In the near term the performance of the European market has to be keenly monitored. At the current market price the stock trades at 8.3x FY2012 and 6.7x FY2013 estimated earnings. We maintain our Buy rating on the stock with a price target of Rs 222," says Sharekhan research report.

Shares held by Central Governments/State Governments

Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

To read the full report click on the attachment