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Buy WS Industries – Sharekhan

August 8, 2007

Sharekhan Equity Research has raised the price target of WS Industries a small cap company from Rs 75 to Rs 108.

Q1FY2008 WS Industries’ (WSI) top line grew by 21% to Rs.47.7 crore, which was slightly above expectation.The profit after tax (PAT) increased by 142.4% to Rs3.95 crore; the PAT growth was higher mainly due to a decrease in both the interest cost, which dropped by 9% year on year (yoy) to Rs1.72 crore, and the depreciation cost, which fell by 4.6% to Rs9 crore yoy. A healthy order book of Rs190 crore, which is about 1.15x its FY2007 revenues.

WSI’s realty subsidiary at the current realisable value of Rs3,500 per square feet. Taking WSI’s current 59% stake in the realty venture, Sharekhan arrives at a value of Rs29 per share, which gives us a fair value of Rs108 per share of WSI. Sharekhan is positive on the stock and maintain Buy recommendation with a revised price target of Rs108.

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