Hold Gandhi Special Tubes; target of Rs 335: ICICI Direct

ICICI Direct's research report on Gandhi Special Tubes

The Indian Meteorological Department (IMD) has forecast near normal rainfall at 96% of LPA for upcoming monsoon season 2017. According to senior officials at the IMD, although there does exist neutral El Niño conditions (30% probability) in the Pacific Ocean, positive dipole movement in the Indian Ocean is expected to counter the Pacific move and result in normal monsoon in 2017.

Outlook

However, PAT is expected to remain largely flat in FY17-19E due to lower effective tax rate (20%) and higher other income in the base year i.e. FY17. We now value GST at Rs 335, i.e. 16x P/E on FY19E EPS of Rs 20.8/share and assign a HOLD recommendation.