Buy Visaka Industries; target Rs 165: Sunidhi Securities
Sunidhi Securities is bullish on Visaka Industries (VIL) and has recommended buy rating on the stock with a target price of Rs 165 in its December 19, 2012 research report.
December 20, 2012 / 16:11 IST
Sunidhi Securities is bullish on Visaka Industries (VIL) and has recommended buy rating on the stock with a target price of Rs 165 in its December 19, 2012 research report.
VIL's cement asbestos products plants with a total capacity of 7, 52, 000 tpa are located at Patancheru (Andhra Pradesh), Paramathi (Tamil Nadu), Midnapur (West Bengal), Vijayawada (Andhra Pradesh), Tumkur (Karnataka), Rae Bareli (Uttar Pradesh), Pune (Maharashtra) and Sambalpur (Odisha). The flat products (V-Boards) plant having capacity of 48, 000 tpa is situated at Miryalguda (Andhra Pradesh) and textile mill is located at Nagpur in Maharashtra.VIL diversified into textile yarn manufacturing in 1992. Visaka took the unknown Airjet spinning technology as a challenge & successfully established the factory in Nagpur to produce about 2000 tons of man-made fibre yarns per annum. The spinning plant, with 28 MURATA Twinjet spinning machines, is the world's largest installation of its kind, producing about 9,000 tonnes of yarns per annum.VIL has strong network of 5000 stockists/dealers throughout India. This apart VIL has depots in 36 major cities and towns, country-wide to ensure smooth supply of its products. Favorable industry developments, diversified portfolio and rich expertise in tapping the potential opportunities are going to mark a remarkable business for VIL in the coming years.VIL commissioned a Rs 47 crore, 1,00,000 tpa cement sheet asbestos product plant in Sambalpur (Orissa) in June 2011 funded largely through internal accruals. This strengthened its regional penetration and increased VIL’s cement asbestos sheet production capacity from 6,52,000 lakh tpa to 7,52,000 lakh tpa. The 48,000 tonnes of sheets per year non-asbestos fiber board & panel division was established in 2009 to cater to the needs of modern construction designs. The further expansion of V-Boards is underway.VIL’s cement asbestos product manufacturing facilities are located nationally to address regional needs – four in South India, one in North India, two in East India and one in West India. VIL enjoys attractive scale in textile business; it possesses the single largest twin airjet equipment installation in India and one of the highest such installations in the world. Its textile products figure in the top five percentile of Uster standards in the world. VIL’s domestic textiles clients comprise brand enhancing names like Siyaram, Pantaloons, Harry’s Collection, Grasim, Donear and Raymond among others.Valuation & Recommendation: The quantum of fibre used in India is minimal (8%). The free floating asbestos used by VIL is well below the 0.1 fibres/standard fixed by Ministry of Environment. VIL uses white fibre whereas it is the carcinogenic blue fibre that is banned. An ongoing audit ensures a safe workplace for employees. VIL was the seventh largest cement asbestos product manufacturer in India in 1996; it is the second largest today. Its manufacturing plants consume the lowest electricity per tonne in the sectors of its presence. VIL’s rich engineering competence is reflected in an ability to design and fabricate cement asbestos manufacturing equipment (for five of its eight plants), reducing the overall cost when compared with the industry benchmarks by 20% and shrinking commissioning time. VIL demonstrated the commissioning of cement asbestos product capacity (100,000 TPA) within nine months of ground breaking, leading to rated capacity utilization within four months of start-up. At the CMP of Rs 126, the share is trading at a P/E of 2.9x on FY13E & 2.4x on FY14E. We recommend BUY with a target price of Rs 165 in the medium term," says Sunidhi Securities research report.Shares held by Central Governments/State Governments 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 
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