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Buy Everest Ind; target of Rs 300: Sunidhi Securities

Sunidhi Securities is bullish on Everest Industries and has recommended buy rating on the stock with a target of Rs 300 in its October 23, 2012 research report.

October 25, 2012 / 02:05 PM IST
 
 
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Sunidhi Securities is bullish on Everest Industries and has recommended buy rating on the stock with a target of Rs 300 in its October 23, 2012 research report.


“Established in 1934, in Katni, Madhya Pradesh, formerly known as Eternit Everest is the first plant in India that was setup to manufacture Fiber-Cement Roofing Sheets & Accessories. EIL manufactures fibre based cement products such as sheets for roofing and interiors as well as non asbestos flat sheets for varied applications including pre-fab housing. The present installed capacity is 7.1 lakh tpa and pre engineered steel building capacity of 30,000 tonnes. EIL was put on the block in 2006 after Holcim, the world's second largest cement producer, gained control of ACC by acquiring a majority stake in Ambuja Cement India, an investment arm of the Sekhsarias. Following the Holcim’s decision to exit the cement products business, Everest Finvest (India) controlled by Sekhsaria of GACL acquired 50% stake in EIL for Rs134 a share for Rs99.2 crore. It also made an open offer to acquire additional 20% shares at Rs184/ share.”


“During Q2FY13, sales rose 19.7% to Rs221.0 crore and net profit by 108.3% to Rs12.5 crore. (YoY). OPM and NPM stood at 11.4% and 5.7% compared to 8.1% and 3.3% respectively in Q2FY12. During FY12, sales advanced by 21.9% to Rs881.5 crore and net profit rose by 17.2% to Rs41.5 crore. EPS stood at Rs27.5. OP and NP margin stood at 9.9% and 4.7% against 10.7% and 4.9% respectively in the corresponding period last year. The results for FY12, excludes capital gain of Rs11.3 crore being the proceeds of sale of land. The DER stood at 0.3:1 (Previous Year 0.5:1) whereas the value of the gross block is Rs379 crore.”


“From a roofing sheet manufacturing, EIL is evolving into a complete building solutions organization. Everest follows a solutions approach and now offers a complete range of building solutions like roofing, ceilings, walls, flooring, cladding, doors and pre-engineered steel buildings for the industrial, commercial and residential sectors. Cement sheets are emerging as a cheaper alternative to galvanized steel sheets. Galvanized steel sheets are also used in housing, as an alternative to asbestos-based products. But the rising steel prices have made galvanized steel sheets more expensive, thereby increasing the gap between the prices of the two products. Being in the construction industry for more than 76 years, Everest has introduced the most high quality building solutions for great architect designs with Smart Steel Buildings, which can be easily installed and relocated. This faster revolutionary construction technique has helped in combining modern designs with speed and strength. With the use of Everest Smart Steel technology, drawing plans can be translated into a ready to erect 3D work within a time period of a few days. These building solutions also provide great resistance to moisture, adverse weather conditions, earthquakes, termites and fire.”


“Everest's fibre cement roofing is preferred in rural and agriculture based housing markets as an affordable and durable roofing solution. Dry wall construction methods using Everest fibre cement boards and solid wall panels are being specified by architects and interior designers in commercial establishments, malls and hotels. Everest pre-engineered and smart steel buildings provide superior design, faster speed and a high degree of certainty for project completion. They are replacing conventional construction methods for warehouses and factory sheds. High performance products like access floors, polycarbonate roofing and fixing accessories are being adopted by builders and contractors. At the CMP of Rs233, the share is trading at a P/E of 4.7x on FY13E and 3.9x on FY14E. We recommend BUY with a target price of Rs300 at which the share will trade at a P/E of 5.0 on FY14E,” says Sunidhi Securities research reports.


Public holding more than 90% in Indian cos


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To read the full report click on the attachment

first published: Oct 25, 2012 01:55 pm

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