Shahina Mukadam, IDBI Capital Market is of the view that Easun Reyrolle looks a decent buy.
Mukadam told CNBC-TV18, "Easun Reyrolle supplies critical components to the very high growth transmission and distribution industry as you know this segment and the sector is growing fast. It manufactures relay panels and it has about 20% market share in this segment. It not only is now growing to 30-35% in this segment; it is also getting into manufacture of switchgear. Very recently, they have acquired a plant in Chennai and this is expected to drive 2008 earnings."
She further added, "As of now in '07 not much has been reflected in the numbers. The company has invested or is investing close to around Rs 13 crore but if you see in FY08, we are expecting a total turnover of close to Rs 205 crore compared to 2007 turnover of about Rs 140 crore. So I think that it is going to drive very strong growth, in terms of valuation also it looks pretty good because we are expecting infact even for FY07, we are expecting them to do an earnings of about Rs 51, which gives you a multiple of around 11 and going forward in 2008, the earnings is expected to jump up to Rs 75, which gives you a multiple of around 8 times. So I think that being in a high growth segment with a good market share, good established product getting into new related areas, all in all looks like a decent buy."
