Buy Alicon Castalloy; target of Rs 90: Sunidhi Securities

Sunidhi Securities' report on Alicon Castalloy

"Alicon Castalloy, during Q2FY14, sales on consolidated basis advanced 18.2 percent to Rs 131.6 crore and net profit rose 34.8 percent to Rs 3.1 crore. (YoY). OPM and NPM stood at 8.4 percent and 2.4 percent compared to 8.2 percent and 2.1 percent respectively in Q2FY13. Q2FY14 EPS stands at Rs 2.8 Vs Rs 2.1 in Q2FY13. During H1FY14, sales on consolidated basis advanced 6.6 percent to Rs 260.2 crore and net profit rose 24.6 percent to Rs 7.6 crore. (YoY). OPM and NPM stood at 9.9 percent and 2.9 percent compared to 9.6 percent and 2.5 percent respectively in H1FY13. H1FY14 EPS stands at Rs 6.9 Vs Rs 5.5 in H1FY13."

"During FY13, sales on consolidated basis advanced by 10.7 percent to Rs 518.6 crore but net profit rose by 17.4 percent to Rs 16.9 crore. OP and NP margin stood at 10.3 percent and 3.3 percent Vs 10.7 percent and 3.1 percent respectively in the corresponding period last year. EPS stood at Rs 17.9. A dividend of 27.5 percent was paid. Today, ACL is one of the largest integrated aluminium casting manufacturing group in India offering end to end solutions across the entire value chain and delivers best-in-class Gravity & Low Pressure casting experience to its customers at the most optimal costs. ACL is having expertise into the Designing, Validation, Casting and Machining, Assembly of Aluminium Components along with its European global foot prints in Austria & Slovakia."

"As ACL is a leader in the casting industry both in terms of size and quality of output, it stands to gain from any tailwinds that the industry benefits from. Further, in order to consolidate its position within the industry, ACL is constantly initiating efficiency drives, in terms of value-added products that are more cost effective, and implementing Kaizen. At the CMP of Rs 66, the share is trading at a P/E of 3.7x on FY14E & 3.0x on FY15E. We recommend BUY with a target price of Rs 90 in the medium term," says Sunidhi Securities research report.

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