Buy Vesuvius India; target of Rs 1392: Edelweiss

Edelweiss' research report on Vesuvius India

Q1CY17 sales catapulted 27.6% YoY (outperforming industry) on account of steel production in large mills jumping 15%. The bigger driver was exports, which sustained CY16 momentum—it had jumped 77% YoY and contributed 20% to sales. While deemed exports grew 17% YoY on account of demand stabilising at Arcelor Mittal in Kazakhstan, direct exports to parent surged 3.2x YoY to INR 853mn (54% of exports).

Outlook

We expect VIL to post revenue and earnings CAGR of 16% and 21%, respectively, over CY16-18E. We maintain ‘BUY’ with target price of INR 1,392. The stock is currently trading at 23.6x CY17E and 19.5x CY18E EPS.