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Poised for strong top-line growth: Finolex Cables is poised for a
strong growth over the next few years, owing to entry in the
verticals of High Tension (HT) and Extra High Voltage (EHV) Cables
and market share expansion in the existing Low Tension (LT)
Cables segment. In the LT cables, organised players are expected
to structurally increase their market share as consumers shift
their preference towards branded products. Entry into the HT
Cables segment gives accessibility to the Generation and
Distribution segment, where the market opportunity is estimated
at `37,000cr over the next 10 years.
Large benefits from Roorkee plant: The rapid ramp up of
production at the Roorkee plant has already started delivering
results. The company has further increased the capacity at this
plant by 50%. The proximity to the growing North Indian markets
and tax benefits from this plant are expected to boost the
turnaround of the company. We expect the Profits to increase to
`139cr in FY2012E from `58cr in FY2010.
Derivative losses expected to taper off: Company's derivatives
losses are expected to decline going ahead. Finolex Cables has
registered substantial derivatives losses in FY2009 and FY2010.
There is still some amount of potential losses that are expected
to be booked in the next few years. However, the worst is behind
us in this regard and the losses are expected to taper going
ahead. By FY2012, these losses are estimated to decline to `24cr
from `76cr in FY2010. Besides, the company has already
incurred capex that is sufficient for its growth over the next 4-5
years. As a consequence of these factors and strong Top-line
growth, we expect RoEs to improve from 9.3% in FY2010 to
18.3% in FY2012E.
Currently trading at attractive valuations: At the CMP, the stock
is trading at attractive valuations of 5.2x FY2012E EPS and 0.9x
FY2012E BV. We have valued the stock at P/E of 9.0x FY2012E
EPS and arrived at a target price of `82. We have a Buy rating
on the stock.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Poised for strong top-line growth: Finolex Cables is poised for a
strong growth over the next few years, owing to entry in the
verticals of High Tension (HT) and Extra High Voltage (EHV) Cables
and market share expansion in the existing Low Tension (LT)
Cables segment. In the LT cables, organised players are expected
to structurally increase their market share as consumers shift
their preference towards branded products. Entry into the HT
Cables segment gives accessibility to the Generation and
Distribution segment, where the market opportunity is estimated
at `37,000cr over the next 10 years.
Large benefits from Roorkee plant: The rapid ramp up of
production at the Roorkee plant has already started delivering
results. The company has further increased the capacity at this
plant by 50%. The proximity to the growing North Indian markets
and tax benefits from this plant are expected to boost the
turnaround of the company. We expect the Profits to increase to
`139cr in FY2012E from `58cr in FY2010.
Derivative losses expected to taper off: Company's derivatives
losses are expected to decline going ahead. Finolex Cables has
registered substantial derivatives losses in FY2009 and FY2010.
There is still some amount of potential losses that are expected
to be booked in the next few years. However, the worst is behind
us in this regard and the losses are expected to taper going
ahead. By FY2012, these losses are estimated to decline to `24cr
from `76cr in FY2010. Besides, the company has already
incurred capex that is sufficient for its growth over the next 4-5
years. As a consequence of these factors and strong Top-line
growth, we expect RoEs to improve from 9.3% in FY2010 to
18.3% in FY2012E.
Currently trading at attractive valuations: At the CMP, the stock
is trading at attractive valuations of 5.2x FY2012E EPS and 0.9x
FY2012E BV. We have valued the stock at P/E of 9.0x FY2012E
EPS and arrived at a target price of `82. We have a Buy rating
on the stock.
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