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Last Updated : Sep 20, 2012 03:20 PM IST | Source:

Buy Pricol; target of Rs 24: Nirmal Bang

Nirmal Bang is bullish on Pricol and has recommended buy rating on the stock with a target of Rs 24 in its September 20, 2012 research report.

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Nirmal Bang is bullish on Pricol and has recommended buy rating on the stock with a target of Rs 24 in its September 20, 2012 research report.

“Pricol lost a significant portion of its market share to competitors on account of significant labour issues during FY’09. With the agreement with labour in place, the company is geared to not only regain the lost market share but also emerge as a dominant auto-ancillary player across the globe. The company is associating with renowned international names which should help not only get access to large multi-national OEMs but also help in procuring electronic components at the most competitive rates. Since the promoters have other business interests also, the company has roped in a professional CEO to manage the day-to-day affairs of the company. This is in sync with the company’s aspiration to emerge as a global auto-ancillary player.”

“The company has a history of continuous dividend pay-out except for FY’09, considering the record loss on account of labour issues. We expect the company to continue with this trend going forward also and with a high probability of rewarding shareholders with a special dividend (like FY’12) on the back of one-time income, in addition to the normal profits from the core business. The management’s efforts to revive the fortunes of the company should start yielding benefits from this financial year onwards.
On the back of the company gradually regaining back the lost market share, coupled with the management’s conservative nature getting reflected in a number of cost-cutting initiatives, we expect Pricol to end the year with net sales of Rs.1030 crore and PAT of Rs.30 crore.”

“We expect Pricol to post a net profit of Rs.30 crore on net sales of Rs.1030 crore in FY’13. At the present price, the share is available at 0.5x book value and a multiple of 5.4x earnings. On the back of various global tie-ups, cost-cutting initiatives and efforts to regain the lost market share, we value the company at 7.5x FY’13E earnings to arrive at a price target of Rs.24 over the next 9 to 12 months,” says Nirmal Bang research report.

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To read the full report click on the attachment

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First Published on Sep 20, 2012 03:11 pm
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