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Buy Jyoti Structures – HSBC

August 27, 2007

HSBC Global Research in a report has said that it is overweight on Jyoti Structures Limited with a price target of Rs 254.

The stock corrected 10% in last week’s trading. This fall should be taken as an opportunity to buy the stock. HSBC is positive for the following reasons.

  • Strong order backlog of INR23bn which is 2.3x of FY07 sales
  • Based on current order backlog and buoyancy in the power transmission line, expect sales CAGR of 30% for the period of FY07-FY10e
  • Expect EBITDA margin to improve on improved execution and expect EPSCAGR of 35% for the period
  • Q1 FY08 results confirms our forecast with sales growth of 34% and EPS growth of49% y-o-y due to improvement in EBITDA margins

The new target price – INR254 is the mid-point of DCF fair value INR201 and PE multiple based fair value of INR307. You can send comments and suggestions to feedback @ dalalstreet.biz

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