Buy Suryalata Spinning Mills; target of Rs 135: Firstcall

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Firstcall Research's report on Suryalata Spinning Mills

The company’s turnover stood at Rs. 869.60 million for the 4th quarter of the financial year 2015 as against Rs. 969.80 million in the corresponding quarter of the previous year. Net profit stood at Rs. 25.90 million against Rs. 26.20 million in the corresponding quarter ending of previous year. Reported earnings per share of the company stood at Rs. 6.07 a share during the quarter as against Rs. 7.14 over previous year period. Profit before interest, depreciation and tax is Rs. 82.10 million as against Rs. 93.50 million in the corresponding period of the previous year.

OUTLOOK AND CONCLUSION

At the current market price of Rs. 116.50, the stock P/E ratio is at 3.62 x FY16E and 3.23 x FY17E respectively.

Earnings per share (EPS) of the company for the earnings for FY16E and FY17E are seen at Rs. 32.15 and Rs. 36.05 respectively.

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Net Sales and PAT of the company are expected to grow at a CAGR of 11% and 17% over 2014 to 2017E respectively.

On the basis of EV/EBITDA, the stock trades at 3.65 x for FY16E and 3.40 x for FY17E.

Price to Book Value of the stock is expected to be at 0.56 x and 0.49 x respectively for FY16E and FY17E.

"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 135 for Medium to Long term investment", says Firstcall Research Report.

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