Buy Nitin Fire Protection; target Rs 91: SKP Securities

SKP Securities is bullish on Nitin Fire Protection Industries (NFPIL) and has recommended buy rating on the stock with a target price of Rs 91 in its October 16, 2012 research report.

"Nitin Fire Protection Industries Ltd (NFPIL) is an end to end solution provider for fire protection, safety and security systems with the capabilities in designing, engineering, commissioning and maintenance. The company’s assembling lines are situated at TTC industrial Area, Vashi and Vishakhapatnam. Majority of its revenues are generated through its subsidiaries

• EBIDTA Margin of the company has decreased to 12.6% during FY12 from 15.4% in FY11 due to increasing raw material cost. PAT margins gone down to 8.2% due to high interest cost.
• We expect the EBIDTA margins to improve by around 120 bps by FY14E due to better realizations and rationalization of raw material cost.
• We further expect PAT margins of the company to improve by 240 bps to 10.6% in FY13 on account lower interest out go due to repayment of short term debt.
• With this repayment we expect the short term debts of the company to come down to around Rs 1 bn in FY13 from Rs 2.9 bn in FY12.
• Thus, we also expect D/E ratio of the company to improve to about 0.3x in FY13E from the 1.1x in FY12.

At CMP the stock is trading at a P/E of 14.0, and 11.2x for FY13E and FY14E respectively. We have valued NFPIL using DCF model of valuation. We recommend BUY rating on the stock with a target price of Rs 91/- (62% upside) in 18 months," says SKP Securities research report. Public holding more than 90% 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. To read the full report click on the attachment

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