Buy Vesuvius: Angel Broking

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Buy Vesuvius: Angel Broking

Angel Broking has recommended a buy rating on Vesuvius. At the CMP, the stock is trading at 4.3x CY2009E earnings.

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Angel Broking has recommended a buy rating on Vesuvius in its report dated October 31, 2008. "Vesuvius is part of the Cookson group, which is the world leader in the Refractory business. Hence, Vesuvius is a competitive player in the Indian Refractory space offering technologically superior products compared to peers offering value-added services through total refractory management services to certain steel manufacturers in India. Further, the Steel Industry, which is the primary consumer of refractory and the target market for Vesuvius, is expected to ramp it production and grow at 10-12% over the next few years."

"At the CMP, the stock is trading at 4.3x CY2009E Earnings. Steel companies are prime customers of Vesuvius and account for approximately 70% of its Revenues. We are downgrading our Target multiple for the stock from 10x to 7x on account of the risks of expected delays in capacity expansion of steel companies due to overall liquidity crunch globally. However, the valuations of the company are attractive given its excellent positioning in the industry and support of its parent. We are downgrading our Target Price to Rs 157 (Rs 225). We maintain a Buy on the stock," says Angel Broking's research report.

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To read the full report click on the attachment......