The stock currently trades at 17.1x FY18e EPS of Rs12.18 and 13.5x FY19e EPS of Rs 15.43. Notwithstanding near term stress in its polymer products business, regional capacities mostly set up on asset light model and strategic tie ups with Sekisui of Japan (for CPVC compound) and WAVIN of Netherlands for advanced plumbing solutions are not worthy of sidestepping.
Sustenance of its engineering products business would rest on increased PGCIL investments in 13th Plan - also in North East and emerging T&D opportunities in South East Asia, Latin America and Africa.
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We recommend buying the stock with a target of Rs 262 based on 17x FY19e earnings (peg ratio: 0.9 on 19% average earnings growth).
About Equirus Securities
Equirus has built impeccable credential and market standing across domains & has created a niche for itself in its ability to structure and deliver transactions in-line with client’s requirement. It takes pride in being a one stop Investment bank for all financial needs of growth oriented mid market companies. Led by seasoned bankers, they work with the largest and the most reputed investors in the industry. Equirus Securities can be accessed at www.equirus.com
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