Hold Good Luck Steel Tubes; tgt Rs 22: Firstcall Research
Firstcall Research has recommended hold rating on Good Luck Steel Tubes with a target price of Rs 22 in its March 08, 2013 research report.
March 11, 2013 / 11:07 IST
Firstcall Research has recommended hold rating on Good Luck Steel Tubes with a target price of Rs 22 in its March 08, 2013 research report.
"Goodluck Steel Tubes is engaged in manufacturing & exporting of a wide range of galvanized sheets & coils, towers, hollow sections, CR coils CRCA and pipes & tubes. The company’s net sales registered a 45% increase and stood at a record Rs. 2478.77 million from Rs. 1709.53 million over the corresponding quarter last year. The company’s net profit registered a 33.23% decrease and stood at a record Rs. 49.50 million from Rs. 74.13 million over the corresponding quarter last year. The company approved to increase the borrowing limit of the company under section 293(1)(d) of the Companies Act, 1956 from Rs. 200 cr. To Rs. 400 cr. The company declared dividend of Rs.0.40, i.e. 20% per equity shares of Rs. 2 each for the financial year 2011-12. Net Sales and PAT of the company are expected to grow at a CAGR of 30% and 24% over 2011 to 2014E respectively.The company’s net profit falls to Rs.49.50 million against Rs.74.13 million in the corresponding quarter ending of previous year, a decrease of 33.23%. Revenue for the quarter rose 45.00% to Rs.2478.77 million from Rs.1709.53 million, when compared with the prior year period. Reported earnings per share of the company stood at Rs.2.64 a share during the quarter, registering 33.23% decrease over previous year period. Profit before interest, depreciation and tax is Rs.181.82 millions as against Rs.133.17 millions in the corresponding period of the previous year.Outlook and Conclusion: At the current market price of Rs.19.75, the stock P/E ratio is at 1.53 x FY13E and 1.18 x FY14E respectively. Earning per share (EPS) of the company for the earnings for FY13E and FY14E is seen at Rs.12.90 and Rs.16.74 respectively. Net Sales and PAT of the company are expected to grow at a CAGR of 30% and 24% over 2011 to 2014E respectively. On the basis of EV/EBITDA, the stock trades at 3.48 x for FY13E and 2.85 x for FY14E. Price to Book Value of the stock is expected to be at 0.30 x and 0.24 x respectively for FY13E and FY14E. We expect that the company surplus scenario is likely to continue for the next three years, will keep its growth story in the coming quarters also. We recommend ‘HOLD’ in this particular scrip with a target price of Rs 22 for Medium to Long term investment," says Firstcall Research report.Bodies Corporate holding more than 50% in Indian cos Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies 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 
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