Wednesday, March 17, 2010

BUY on Pratibha Industries at CMP 361 with price target of Rs 540

We recommend a BUY on Pratibha Industries at CMP 361 with price target of Rs 540 based on FY11 estimates, providing an upside of 50% from the current levels.

 

Pratibha Industries Limited has over two decades experience in multifunctional infrastructure projects. The water supply projects segment is the biggest contributing approximately 70%. This segment is essentially a niche segment and PIL has a strong reputation for itself in this segment. PIL has diversified into airports, tunnels, road, retail, urban, oil and gas transmission and power segments. PIL also receives synergy benefits from Pratibha Pipes and Structures (P) Limited which was created in 1996 to augment the operations of PIL.

 

PIL had an order book of Rs 2100 crore at the end of FY09 which may take 1-3 years to complete. Although PIL is a new entrant, it has secured impressive array of projects. Company's revenues have grown at an outstanding CAGR of 70.74% during last four years. It recently entered into hydrocarbon business and has already shown positive results signing an agreement with GAIL in addition to another 4 hydrocarbon projects which are in the pipeline.

 

FII investors include Credit Suisse (Singapore) Limited, Premier Investments Fund Limited, Swiss Finance Corporation (Mauritius) Limited, and Merrill Lynch Capital Market Espana S.A.S.V.

 

We expect FY11 EPS to be Rs 45, which makes it quite reasonably valued at a PE of 8 on FY11 EPS at current price of Rs 361.  

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