Synopsis
- Srikalahasthi Pipes Ltd incorporated on 1stNovember, 1991 by Lanco Group of Companies to manufacture Pig Iron and Cement.
- In Q3 FY15, Net profit jumps to Rs.213.76 million an increase of 142.17% against Rs.88.27 million in the corresponding quarter of previous year.
- The company’s net sales increased by 19.96% and stood at Rs. 3080.15 million from Rs.2567.64 million over the previous year quarter.
- During the quarter operating profit is Rs.510.76 million as against Rs.343.11 million in the corresponding period of the previous year.
- Reported earnings per share of the company stood at Rs.5.38 in Q3 FY15 as against Rs.2.22 in Q3 FY14.
- During the quarter Profit before tax stood at Rs.311.23 million as against Rs.101.01 million over the corresponding quarter of previous year, an increase of 208.12%.
- The company,s expansion program of Rs.1000 million would be completed by March 2015, which will result in increase of company's Ductile Iron Pipe production by 50000 Million Tonnes (MT).
- Net Sales and Operating Profit of the company are expected to grow at a CAGR of 11% and 52% over 2013 to 2016E respectively.
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Outlook and Conclusion
- At the current market price of Rs.123.00, the stock P/E ratio is at 6.40 x FY15E and 5.01 x FY16E respectively.
- Earnings per share (EPS) of the company for the earnings for FY15E and FY16E are seen at Rs.19.21 and Rs.24.55 respectively.
- Net Sales and Operating Profit of the company are expected to grow at a CAGR of 11% and 52% over 2013 to 2016E respectively.
- On the basis of EV/EBITDA, the stock trades at 4.85x for FY15E and 4.11 x for FY16E.
- Price to Book Value of the stock is expected to be at 1.71 x and 1.43 x respectively for FY15E and FY16E.
- We recommend ‘Buy’ in Srikalahasti Pipes with a target price of Rs140 for Medium to Long term investment.
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