Axis Direct recommended hold rating on Elgi Equipments with a target price of Rs 230 in its research report dated March 16, 2017.
Axis Direct's research report on Elgi Equipments
With best-in-class product suite (both in terms of width and quality), Elgi has drawn up a plan in conjunction with Boston Consulting Group (BCG) to revitalize its marketing operations both domestic and overseas. Losses in international operations have been eliminated and marketing/distribution issues are improving (the first phase of BCG strategy).
As the earnings growth would be back-ended, we believe the stockis likely to remain at elevated multiples. Using a 2-stage DCF, we arrive at TP of Rs 230 (7% upside) implying FY18 PE of 28x; downgrade to HOLD.
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