Hold Mcleod Russel; target of Rs 300: R K Global

R K Global has recommended hold rating on Mcleod Russel (India) with a target of Rs 300, in its June 01, 2012 research report.

“Mcleod Russel registered a mere ~12% decline in its standalone net profit for FY’12 at Rs2,601 mn owing to loss of crop during the months of November, December and March. On the profit side, the company has posted a standalone net loss of Rs1,572 mn for the fourth quarter of FY’12 in comparison to a net loss of Rs1,229 mn in Q4FY’11”

“For the quarter ended March’12, the company has reported ~14% increase in the total sales at Rs2,601 mn and ~28% increase in net loss Rs1,572 mn. Sales for the quarter grew ~13% to 190 lakh kgs while crop size declined sharply ~72% to ~7 lakh kg. Prices remained flat at Rs1,373 mn per kg in quarter under review. On the price front, the season has started off on a positive note for McLeod. The ruling price today is Rs30 to Rs40 higher than last year. This is due to two reasons. From the month of November the company had lost crops due to early winter and we lost crop in Nov’-Dec’ and March. Basically, the inventory levels at the frontend are depleted and buyers had to come in with a higher force to pick up the tea. Going into the FY’13E season, if the weather holds well, we believe that this deficit of April and May will not really catch up. However, weather forecast for the FY’13E period does not holds good & might see fall-out in crops in Q1FY’13E.”

“North India and with the prices at Rs30-Rs40 higher, should remain at a much higher level going into the season. At CMP, the stock trades at a P/E of ~8.7x and P/BVPS of ~1.5x of FY’13E EPS. We revalue Mcleod Russel from our earlier TP of Rs215 to Rs 300, however, re-iterate our HOLD stance with a potential upside of ~7.5% from current levels. At our TP, the stock would be trading at a **P/E of ~9.3x and P/BVPS of ~1.7x, factored over FY’13E EPS of Rs32 and BVPS of Rs181,” says R K Global research report.  

FIIs holding more than 30% 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

Read More