Karvy's reserach report on Tube InvestmentWe expect the cycles & components segment to grow at a CAGR of 12.4% with volumes and realisation growing at CAGR of 3.5% and 8.9% during FY15-17E. We consider licensing between TI and Ridley to be beneficial in the premium and super premium categories. We expect speciality segment to remain as the fastest growing at a CAGR of 19.7%, while with support from institutional buying; standard segment is expected to grow above industry growth rate of 3.7% during FY15-17E. We initiate coverage on Tube Investment of India with a ‘BUY’ recomendation for a target price of Rs.464 on SoTP basis with a combination of price-earnings and price-to-book multiples with standalone business valued at Rs.130 based on 23x (11 year average P/E) of FY17E EPS of Rs.5.7, Chola investment and Shanthi Gears valued at 1x FY17E P/B of Rs.269 and Rs.35 respectively, Chola MS valued at 1x H1FY16 P/B of Rs.25 and all other investments valued at 1x FY15 investment value of Rs.5 aggregating to per share value of Rs.464 representing an upside potential of 16% for 9-12 months period. For all recommendations, click here Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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