June 01, 2016 / 19:58 IST
AUM Capital's research report on Srikalahasthi Pipes
SPL reported net sales growth of 4.52% YoY in Q4FY16 at Rs. 315.05 crores, backed by 100% capacity utilization in DI pipes segment. The top-line break up of SPL net revenue of Rs 1145.61crs for FY16 includes 74.0% contribution from DI pipes. SPL is amongst the top 10 players in the DI pipe industry in India, and commands around 15% market share across India and around 75% in South and Western Zone. The DI pipe market is growing at CAGR of 12% in India, and is expected to grow at a CAGR of 15-17%.
At the CMP of Rs 244, the stock is trading at 4.8x FY18E EPS. We recommend a BUY on the stock with a Price Target of Rs. 307 (6xFY18E EPS) with an upside potential of 25.4% from the current level with an investment horizon of 12-18 months.
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