Buy Muthoot Capital Services; target of Rs 242: Firstcall

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Firstcall Research report on Muthoot Capital Services

"Muthoot Capital Services, is a part of Muthoot Pappachan Group, has reported its financial results for the quarter ended 30th Sept, 2014. The company has achieved a turnover of Rs 465.50 million for the 2nd quarter of the financial year 2014-15 as against Rs. 373.80 million in the corresponding quarter of the previous year. The company net profit Jumps to Rs. 53.90 million against Rs. 51.30 million over prior period of Last year. For Q2 FY15, EBITDA is at Rs. 276.50 million against Rs. 228.20 million in the corresponding quarter of the previous year. The company has reported an EPS of Rs. 4.32 for the 2nd quarter as against an EPS of Rs. 4.11 in the corresponding quarter of the previous year."

OUTLOOK AND CONCLUSION

At the current market price of Rs. 212.10, the stock P/E ratio is at 11.21 x FY15E and 10.29 x FY16E respectively.

Earning per share (EPS) of the company for the earnings for FY15E and FY16E is seen at Rs.18.91 and Rs.20.62 respectively.

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Net Sales and PAT of the company are expected to grow at a CAGR of 30% and 6% over 2013 to 2016E respectively.

On the basis of EV/EBITDA, the stock trades at 7.27 x for FY15E and 6.77 x for FY16E.

Price to Book Value of the stock is expected to be at 1.86 x and 1.58 x respectively for FY15E and FY16E.

"We expect that the company surplus scenario is likely to continue for the next three years, will keep its growth story in the coming quarters also. We recommend ‘BUY’ in this particular scrip with a target price of Rs 242 for Medium to Long term investment", says Firstcall Research Report.

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