Buy Godrej Industries; target of Rs 320: Firstcall

Firstcall Research report on Godrej Industries

"Godrej Industries is part of the Godrej group, one of the leading business groups in India and is in the businesses of Oleochemicals, surfactants, finance & investments and estate management, reported its financial results for the quarter ended 30th Sep, 2014. Consolidated net profit jumps to Rs. 951.60 million against Rs. 935.90 million in the corresponding quarter ending of previous year, an increase of 1.68%. Revenue for the quarter rose by 12.74% to Rs. 22981.60 million from Rs. 20384.70 million, when compared with the prior year period. Reported earnings per share of the company stood at Rs. 2.84 a share during the quarter, registering 1.68% increased over previous year period. Profit before interest, depreciation and tax is Rs. 1658.50 million as against Rs. 1913.70 million in the corresponding period of the previous year."

OUTLOOK AND CONCLUSION

At the current market price of Rs. 296.70, the stock P/E ratio is at 29.51 x FY15E and 27.15 x FY16E respectively.

Earning per share (EPS) of the company for the earnings for FY15E and FY16E is seen at Rs.10.05 and Rs.10.93 respectively.

Net Sales and Operating Profit of the company are expected to grow at a CAGR of 14% and 22% over 2013 to 2016E respectively.

On the basis of EV/EBITDA, the stock trades at 29.78 x for FY15E and 25.42 x for FY16E.

Price to Book Value of the stock is expected to be at 3.27 x and 2.97 x respectively for FY15E and FY16E.

"We recommend ‘BUY’ in this particular scrip with a target price of Rs 320 for Medium to Long term investment", says Firstcall Research Report.

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