Buy Kirloskar Ferrous; target of Rs 78: Firstcall Research

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Firstcall Research report on Kirloskar Ferrous Industries“Kirloskar Ferrous Industries Limited was founded in 1991 and is headquartered in Koppal, India. KFIL is the flagship company of the Kirloskar Group. KFIL is promoted by Kirloskar Oil Engines Ltd and Shivaji Works Ltd. And later in the year 2007, SWL (Shivaji Works Ltd) was acquired by KFIL. KFIL is incorporated with the objective of catering to the requirement of high quality Pig Iron, Intricate thin walled grey iron castings to the emerging in Tractor, Auto, Engine and other related segments. KFIL manufactures pig iron and ferrous castings (foundry). Pig iron is primarily used by automobiles, tractors, textiles, pump, diesel engine industries and secondary steel mills. The company manufactures and sells iron castings in India. KFIL is determined to maintain its position as market leader in Pig Iron and Grey Iron Castings business. Today building on its core engineering strength, the group's scope of operations spans across a gamut of industrial equipment ranging from pumps & valves, eco-friendly diesel engines & silent generating sets, air & gas compressors, air-conditioning and refrigeration equipment, a wide range of anti-corrosion coatings and castings for automotive sector.” “At the current market price of Rs. 66.70, the stock P/E ratio is at 13.69 x FY15E and 10.38 x FY16E respectively. Earnings per share (EPS) of the company for the earnings for FY15E and FY16E are seen at Rs. 4.87 and Rs. 6.43 respectively. Net Sales and PAT of the company are expected to grow at a CAGR of 13% and 31% over 2013 to 2016E respectively. On the basis of EV/EBITDA, the stock trades at 6.54 x for FY15E and 5.23 x for FY16E. Price to Book Value of the stock is expected to be at 1.90 x and 1.69 x respectively for FY15E and FY16E. We recommend ‘BUY’ in this particular scrip with a target price of Rs. 78.00 for Medium to Long term investment,” says Firstcall Research report.  

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