Hold SML Isuzu; target of Rs 1280: Karvy

Karvy Stock Broking's report on SML Isuzu

As the industry enters the growth phase, SML is well planned to increase its sales momentum. New capex investment of Rs.2200 Mn is expected to be deployed in the next two years i.e. by 2017, exclusively for product and research development. This outlay is expected to cater mainly to the goods segment as the company has a very low market share of about 0.7% as on FY15 in this segment."

"At CMP of Rs. 1127, the stock is trading at 36.1x of its FY17E EPS. We value the company at 41x P/E for a target price of Rs 1280, representing an upside of 13.5%.Even though the overall company’s performance and industry prospects look quite appealing, the company still has to substantiate the new capex program with meticulous execution and the share price in the market seems to have factored in most of the benefits. Therefore we recommend "HOLD" on the stock as the company is at the beginning of its new venture", says Karvy Stock Broking research report.

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