Buy MRF; target of Rs 15810: Microsec
Microsec is bullish on MRF and has recommended buy rating on the stock with a target of Rs 15810 in its April 24, 2013 research report.
April 26, 2013 / 14:05 IST
Microsec is bullish on MRF and has recommended buy rating on the stock with a target of Rs 15810 in its April 24, 2013 research report.
“We rate MRF Limited a BUY. MRF (Madras Rubber Factory) is India's No.1 tyre manufacturing company. It manufactures various tyres for passenger cars, two-wheelers, trucks, buses, tractors, light commercial vehicles and off-the-road tyres. MRF is a market leader in the tyre industry with a market share of ~ 27 percent. Currently, MRF exports tyres to over 65 countries including America, Europe, Middle East, Japan, and the Pacific region. It presently has overseas offices in Dubai, Vietnam and Australia.” “Despite the falling rupee and sluggish demand, the correction in rubber prices and crude oil prices are resulting in margin improvement for tyre companies. Domestic rubber and crude oil prices have come down by 24.5 percent and 15.6 percent respectively from its peak. The company has shown robust growth in profit in the half year ending Sep FY13. PAT of the company has grown by 48.59 percent to INR390.8 crore in comparison to INR263 crore. EBITDA margin of the company improved from 9.98 percent to 14.28 percent and PAT margin improved from 4.8 percent to 6.59 percent on back of falling rubber and crude oil prices. The company has managed to carry out the R&D activities efficiently and likely to do so in the future. The R&D activity have helped the company in many ways like – development of new products for domestic and export market, development of new raw materials for specific application, development of new formulation, development of new technique in making process improvements, development of new equipment and modification of existing machinery.”“At the CMP of INR13828, the stock is trading at a P/E of 7.8x its FY13E EPS of INR1773 and 7.4x its FY14E EPS of INR1860. The company has sound business model and ROE of 22.5 percent. We assign a P/E multiple of 8.5x to its FY14E EPS to arrive at a Target price of INR15810 for a time period of 12-15 months,” says Microsec 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. 
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