Buy Kirloskar Ferrous; target of Rs 140: Centrum

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Centrum's research report on Kirloskar Ferrous

Kirloskar Ferrous (KFIL) lost M/s Kanhaiyalal Duhderia (KLD mine) in the re-auction to MSPL which won the mine at 111% offer price. Earlier KFIL had won the mine at 110% offer price but the auction was revoked and mine was put for re-auction by the auction authorities due to some technical issues in bidding. KFIL was not expected to realise any material savings due to the high offer price paid by it in the auctions and we had infact estimated negative contribution in our calculations (refer our 10 Sep note “Issues of ore, no more”). We see the losing of KLD mine as a neutral to positive event for KFIL.

Outlook

We now expect savings of Rs250-360mn from the BMM mine which was won by KFIL earlier at 55.5% offer price providing it with 50% captive integration on iron ore. Maintain Buy with TP of Rs140.

For all recommendations report, click here

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