Everest Industries has target of Rs 264: Tater

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Everest Industries has target of Rs 264: Tater

Everest Industries has target of Rs 264, says Ashish Tater, Fort Share Broking.

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Excerpts from Bazaar on CNBC-TV18 Watch the full show » ALSO READ See previous views by Ashish Tater See what other Experts & Brokerages are saying about Everest Ind See messages about Everest Ind Everest Ind BSE | NSE 30/05/12 Are Mutual Funds betting on Everest Ind?

Everest Industries has target of Rs 264, says Ashish Tater, Fort Share Broking.

Tater told CNBC-TV18, "I have always been a fan of a company which tries to reduce its financial exposure in terms of debt whenever there is a possible risk of downside for the industry which is about to come. Everest Industries is one such company where the enterprise value has fallen significantly because of aggressive repayment of loan backed by capacity expansions till the company was able to announce another capacity expansion in Balasore, Orissa."

He further added, "This would take the company sales close to Rs 1,000 crore. They have halved their interest cost in the last nine months that means their replacement value of EV compared to its peers is trading at 35-40% discount that also gives me a target. If I take a fundamental call into the company, the company is one of the pioneers into its business which almost 14% share."

"I was reading about companies in the US which are in a similar kind of business. Almost 70% of the companies in the US go for pre-engineering steel solution because it's easy to maintain. This is about to hit India also because we feel that with companies becoming more cost sensitive, they would try to go for brownfield expansion which is a prefect solution."

"This company is a pioneer in its space within the industrial and logistic sector. They have been regarded as one of the top architects, consultants and contractors in the space. If I take a call, they would do a topline of approximately 25-30% and will also be able to justify its bottomline by the same amount."

"There will be an EPS accretion. For the current year itself they would be clocking close to Rs 25-26. For the next fiscal they will clock Rs 33-34. Here is the catch - they are trading in a range of 6.5 times PE to 9 times PE that's our median forecast. Even if I take a median PE of 8 times on Rs 33 it gives me a decent target of Rs 264. Everest Industries and its businesses normally hog the limelight in the first two quarters post the financial closure. If I try to take my quant call into the stock, this is one stock which attracts me a lot at current levels."

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