Buy Zuari Industries; target of Rs 712: Firstcall Research

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Buy Zuari Industries; target of Rs 712: Firstcall Research

Firstcall Research is bullish on Zuari Industries and has recommended buy rating on the stock with a target of Rs 712 in its January 22, 2011 research report.

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Firstcall Research is bullish on Zuari Industries and has recommended buy rating on the stock with a target of Rs 712 in its January 22, 2011 research report.

"Zuari Industries was incorporated in 1967 as Zuari Agro Chemicals to manufacture urea and complex fertilisers. Being part of the K.K. Birla Group, the company set up a plant in Goa in partnership with US Steel Corporation. As a company dedicated to partnering for prosperity with the Indian farmer, Zuari's operations are spread across five key marketing areas. The company has a manufacturing facility at Goa, with four plants, dedicated to providing these markets with urea, DAP and NPK based fertilizers. These fertilisers are both affordable and effective. Zuari deals in agricultural inputs such as seeds, speciality fertilisers, and pesticides, making it a single window agricultural solution provider. The wide variety and reach of the group's companies has enabled Zuari to diversify into several related and unrelated sectors. Zuari has established itself as a key brand in sectors such as furniture, oil tanking, seeds, and investments, apart from agricultural inputs."

"Zuari Industries has signed gas supply agreement with GAIL (India) for supply of RLNG to its fertilizer plant. The RLNG will be used as feed stock in place of Naphtha for Company's plant at Zuarinagar, Goa. The expected date of supply of RLNG is January 01, 2013. . During the quarter, the company has reported Net Profit increased to Rs. 365.70 million from Rs.248.90 million in previous year same quarter. PAT and Operating profit of the company are expected to grow at a CAGR of 27% and 18% over 2009 to 2012E respectively. Price to book value of the stock is expected to be at 1.48 x and 1.28 x respectively for FY11E and FY12E."

"Earning per share (EPS) of the company for the earnings for FY11E and FY12E is seen at Rs 62.96 and Rs 65.16 respectively. On the basis of EV/EBITDA, the stock trades at 5.85 x for FY11E and 5.60 x for FY12E. At the current market price of Rs 630, the stock is trading at 10.01 x FY11E and 9.67 x FY12E respectively. 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 712 for medium to long term investment," says Firstcall Research report.

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To read the full report click on the attachment