TEIL’s engineering business contributed 28% to FY06 revenues. We expect this share
to touch 45% in FY09E. Currently, the stock trades at P/E multiple of sugar industry
peers only. The total quantum of engineering business, already quite sizeable andto touch 45% in FY09E. Currently, the stock trades at P/E multiple of sugar industry
profitable, shows robust growth ahead; this would enable the company to command a
better P/E multiple than its peers. Hence, we have applied the sum-of-parts method in
deriving an appropriate target price.
deriving an appropriate target price.
At current market price of Rs90, the stock trades at 14.9x and 8.9x its FY08E
and FY09E EPS respectively. Given the robust outlook for the sugar industry and TEIL’s
inflating engineering business, we initiate coverage on the stock with a ‘BUY’
recommendation and a target price of Rs117.Download Full Report from Here
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