Prabhudas Lilladher has maintained ‘outperformer’ rating on Hindustan Dorr Oliver with a price target of Rs 138, an upside of 38.5 per cent from current level. The company reported revenue of Rs 305 crore in 2007-08, 46 per cent year on year increase.
EBITDA margin for the year improved by 240 basis points to 11.3 per cent, while margin for Jan-Mar 2007-08 shot up to 14.4 per cent from 9.9 per cent in Jan-Mar 2006-07. The margin expansion has been mainly due to two projects with higher margins. The management expects its margin to improve by 1-1.5 per cent from the current levels of 11.5 per cent.
The company’s order book currently stands at Rs 740 crore. Out of this, environmental and mineral beneficiation accounts for Rs 300 crore and Rs 370 crore respectively. Paper, fertiliser and water accounts for another Rs 75 crore. The company recently won a Rs 250 crore order from Vedanta Aluminium. The current order book provides a reliable outlook on the growth targets set by the company management, says the brokerage.
The company intends to spend Rs 50 crore on capital expenditure in 2008-09, mainly for their manufacturing facility in Gujarat.
At the market price of Rs 100, the stock trades at 10.8 x FY09E and 7.2x FY10E earnings of Rs 9.2 and Rs 13.8 respectively.
Link to the article: http://economictimes.indiatimes.com/Prabhudas_picks_Hindustan_Dorr_Oliver_Ashok_Leyland_Suzlon/articleshow/3145241.cms
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