Dear All, Forwarding you the Initiating Coverage on Visaka Industries with a Buy recommendation and Target price ` 174 (12 months) Visaka Industries (VIL) is engaged in two businesses – building products (cement asbestos products and fibre cement flat products like V-boards and V-panels) and synthetic yarn. It has an installed capacity of 7,52,000MT of cement asbestos products with a strong network of 6000 plus stockists / dealers across India. In the synthetic yarn segment it has an installed capacity of 31 MTS M/CS. With consumer and business confidence improving in building products segment and sustainable performance of its synthetic yarn segment, we expect the company to post a strong performance going ahead. The company’s depreciation cost is expected to increase sharply in FY2015 due to changes made in the Company’s Act 2013 which lays down the new rates for depreciation of fixed assets. However, in FY2016E, the depreciation cost is expected to decline by ~30% yoy which will significantly boost profits. We expect the net profit to grow at a CAGR of 81% over FY2014-16E to `39cr. At the current price of `123, the stock is trading at a valuation of 5x FY2016E EPS, which we believe is attractive. We initiate coverage on VIL with a Buy rating and a target price of `174, valuing the stock at 7x on FY2016E earning
Posted on: Wed, 19 Nov 2014 06:41:28 +0000
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