Buy Pitti Laminations; target of Rs 84: ICICIdirect

ICICIdirect.com's report on Pitti Laminations

"The board of directors of Pitti Laminations has approved a stock split of the company’s equity share (listed on both NSE & BSE) in the ratio of 1:2 i.e. one equity share of face value of Rs 10/share gets converted to two equity shares of face value of Rs 5/share. The record date for the stock split has been fixed as April 17, 2015 i.e. Friday while the stock goes ex-spilt from tomorrow i.e. April 16, 2015."

"With the recovery of the domestic capex cycle & good export orders visibility, we expect sales and PAT to grow at a CAGR of 20.7% and 62.4%, respectively, in FY14-17E. The increase in PAT will also be aided by an improvement in EBITDA margins (80 bps over FY14-17E) on account of increasing share of value added products. However, increase in working capital needs may keep debt-equity at ~1.1x (FY14-17E). Hence, on the conservative side, we have valued Pitti at Rs 80-88, i.e. 12.0x-13.0x P/E on FY17E EPS of Rs 6.7/share. We maintain our BUY rating on the stock with the revised fair value at Rs 80-88/share (adjusted for split). Investors already invested in the stock are advised to hold on to the stock with a medium to long term investment horizon", says ICICIdirect.com research report.

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