Sharekhan has recommended ‘buy’ on International Combustion for a target price of Rs 519. In Jan-Mar 2007-08, the revenues grew by 20.3 per cent to Rs 29 crore. The revenue growth was ahead of the brokerage expectations.
On a segmental basis, the revenues of the material handling equipment division grew by 9.1 per cent to Rs 20.1 crore whereas that of the geared motor and gear box division increased by a strong 53.6 per cent to Rs 9.1 crore. Even though the growth in GMGBD was good, the division's margin fell sharply by 350 basis points to 11.2 per cent.
The operating profit of the company grew by 21 per cent to Rs 5.9 crore during the quarter. The operating profit margin was flat at 20.4 per cent (up ten basis points).
The company's interest cost declined by 25 per cent to Rs 0.1 crore and its depreciation charge rose by 11.4 per cent during the quarter.
Consequently, the net profit grew by 40.2 per cent to Rs 3.5 crore, which was ahead of Sharekhan’s expectation mainly due to a higher than expected revenue growth during the period.
The current order book of the company stands at Rs 56 crore of which Rs 49 crore worth of orders are for the MHE division and the balance Rs 7 crore are for GMGBD.
Sharekhan expects the company’s revenues to grow at a compounded annual growth rate of 18.2 per cent and net profit to rise at a CAGR of 20 per cent over FY2008-10.
At the market price of Rs 378, the stock trades at 6.3x FY2009E earnings and enterprise value/earnings before interest, depreciation, tax and amortisation (EBIDTA) of 2.9x on FY2009E.
No comments:
Post a Comment