Buy Arcotech; target of Rs 113: Firstcall Research

Firstcall Research report on Arcotech

"Arcotech has been promoted in 1981 for manufacturing internationally acceptable quality of Copper & Brass Strips and Foils. The organisation is managed by a team of highly qualified and experienced professionals from the Non Ferrous Industry and has established itself as one of the leading manufacturers of Copper/Brass Strips and Foils in the Country by creating a niche of producing micro thin foils up to 0.04 mm with close tolerance. The company has now expanded and increased its product range to include other Non Ferrous alloys like Phosphor Bronze, Nickel Silver, Nickel Brass, Cupro Nickel, Aluminium Bronze, Tin Bearing Copper and Silver Bearing Copper etc. These are produced in the form of semis like ingots, strips, sheets, plates, foils, bus bars, etc. Moreover, the company plans to broaden the already wide range of products to include products like tubes, coin blanks, rods and wires. The company has a rigorous quality control system with a state of art laboratory to achieve precise dimensions with close tolerances. Accredited with ISO/TS 16949:2009 Certificate, ISO 9001 and ISO 14001 certifications, Arcotech assure its customers an internationally acceptable quality product at competitive price along with timely delivery. Industrial Growth Centre, Bawal is earmarked for large and strategic industries and is a showcase for Haryana Government. The leading automobile companies like Maruti Suzuki, Honda Motors, and Hero Honda together with their ancillary units are in close proximity.”

“Arcotech Ltd achieved a turnover of Rs. 1083.27 million for the 4th quarter of the current year 2012-13 as against Rs. 801.81 millions in the corresponding quarter of the previous year. The company has reported an EBITDA of Rs. 141.53 millions and a net profit of Rs. 80.96 million against Rs. 81.29 million reported respectively in the corresponding quarter of the previous year. The company has reported an EPS of Rs. 4.05 for the 4th quarter as against an EPS of Rs. 4.06 in the corresponding quarter of the previous year.”

“At the current market price of Rs 100, the stock P/E ratio is at 7.55 x FY14E and 6.66 x FY15E respectively. Earning per share (EPS) of the company for the earnings for FY14E and FY15E is seen at Rs.13.25 and Rs.15.01 respectively. Net Sales and PAT of the company are expected to grow at a CAGR of 26 percent and 19 percent over 2012 to 2015E respectively. On the basis of EV/EBITDA, the stock trades at 3.49 x for FY14E and 3.05 x for FY15E. Price to Book Value of the stock is expected to be at 1.58 x and 1.28 x respectively for FY14E and FY15E. We recommend ‘BUY’ in this particular scrip with a target price of Rs 113 for medium to long term investment,” says Firstcall Research report. 

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