Buy Shalimar Paints; target of Rs 153: Firstcall Research

Firstcall Research is bullish on Shalimar Paints and has recommended buy rating on the stock with a target of Rs 153 in its January 15, 2013 research report.
 
“Shalimar Paints incorporated in the year 1902, is one of the leading paints manufacturing companies in India. The company has a colour bank of 9000 shades. The Company has a wide product range in both Architectural and Industrial sectors. It has network of 54 branches and depots spread across India. The Company also has tinting systems under the brand name 'Color Space'. It has network of 6000 dealers.”
 
“Shalimar Paints Ltd is one of the leading paints manufacturing companies of India, reported its financial results for the quarter ended 30th Dec, 2012. The Third quarter witnesses a healthy increase in overall sales as well as profitability of the company. The company’s net profit jumps to Rs.46.90 million against Rs.37.90 million in the corresponding quarter ending of previous year, an increase of 23.75%. Revenue for the quarter increase 14.63% to Rs.1437.80 million from Rs.1254.30 million, when compared with the prior year period. Reported earnings per share of the company stood at Rs.2.47 a share during the quarter, registering 75.25% decrease over previous year period due to change in face value from Rs. 10.00 to Rs. 2.00. Profit before interest, depreciation and tax is Rs.117.40 millions as against Rs.97.20 millions in the corresponding period of the previous year.”

“At the current market price of Rs 136, the stock P/E ratio is at 14.87 x FY13E and 12.99 x FY14E respectively. Earning per share (EPS) of the company for the earnings for FY13E and FY14E is seen at Rs.9.15 and Rs.10.47 respectively. Net Sales and PAT of the company are expected to grow at a CAGR of 16% and 19% over 2011 to 2014E respectively. On the basis of EV/EBITDA, the stock trades at 6.87 x for FY13E and 6.03 x for FY14E. Price to Book Value of the stock is expected to be at 3.18 x and 2.55 x respectively for FY13E and FY14E. We expect that the company surplus scenario is likely to continue for the next years, will keep its growth story in the coming quarters also. We recommend ‘BUY’ in this particular scrip with a target price of Rs 153 for medium to long term investment,” says Firstcall Research report.

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