AnandRathi is bullish on Everest Industries and has recommended buy rating on the stock with a target of Rs 344 in its January 2, 2013 research report.
“Everest is one of India’s fastest growing building solutions company. Founded in 1934, Everest is one of the most respected and renowned business entities in India, and has dominated the market ever since. It has continuously introduced innovative and modern building products with a promise of strength, speed and safety. Everest offers a complete range of world-class building solutions: roofing, ceiling, wall, flooring, cladding, door and pre-engineered steel buildings for the industrial, commercial and residential sectors. Historically, Everest has provided rural shelters, by making corrugated roofing sheets available to farmers at a competitive price. The company is poised to capitalize on the opportunities in rural India, where various housing and infrastructure initiatives are envisaged by the Government. The Everest brand of products are produced at state-of-the-art ISO:9000 certified manufacturing facilities located at Kymore, Nashik, Coimbatore, Kolkata and Roorkee. With over 6000 retail points spread across the nation, together with the strength of over 1285 highly qualified and experienced engineers, designers and technicians, Everest provides building solutions that successfully meet the highest standards of quality and durability.”
“After successfully catering to the Indian market, Everest has widened its horizons in the international arena. With consistent exports to Europe, Africa, Australia and Asia, Everest is all set to scale new heights and establish a strong foundation in the global market. Banking on 76 years of experience and highly sophisticated technology, Everest assures customers that all its products live up to the promise of strength, speed and safety During the year ended March 31, 2012, the building products division of it produced about 6.5 lac million ton of fibre cement products. It fibre cement roofing sheets are produced at five locations includes Bhagwanpur (Uttarakhand), Kolkata (West Bengal), Kymore (Madhya Pradesh), Lakhmapur (Maharashtra), Podanur (Tamil Nadu). Its building products division contributes 75% of revenue while 25% comes from the building steel division. Its market share in asbestos cement sheets in FY12 was 13%. The company has manufacturing plants across India. In building products, it has 710,000-ton capacity, and in building steel, 30,000 tons. Its all-India sales and distribution network covers 38 sales depots.”
“Management expects with higher capacity, growth in exports, its thrust on setting up plants at new locations would help attain a 20-25% CAGR over FY12-15. The company aims to increase its operating margin from present levels due to the operating leverage kicking in.”
“At CMP of Rs. 245 EIL is quoting at PE of 6.17x and 5.51x for FY 13e & FY 14e respectively. High ROE Companies trades at high multiple because of higher growth (ROE helps to generate high growth). EIL is trading at below market overall PE even if generating high ROE and ROCe. We believe it is value buy,” says AnandRathi research report.