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RECO : Accumulate TP : Rs 684
Investment Rationale
§ Robust performance by the domestic operation with Q3FY11 EBITDA/ tonne reported at US$380; Brownfield
expansion of 2.9 mtpa by Q4FY12
§ Adoption of cost cutting measures in the European business along with selling of non- performing assets and
focus on raw material integration
§ Continuous thrust on balance sheet restructuring with an aim of de-leveraging to offset near- term profitability
issues in European operations
Valuations
§ At the CMP of Rs 621, the stock is discounting its FY12E earnings by 7.4x and FY12E EV/ EBITDA by 5.2x
§ We value the Indian operation 6x FY12E EV/ EBITDA and European operation and other subsidiaries at
4xFY12E EV/ EBITDA to arrive at a target price of Rs 684/ share
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
RECO : Accumulate TP : Rs 684
Investment Rationale
§ Robust performance by the domestic operation with Q3FY11 EBITDA/ tonne reported at US$380; Brownfield
expansion of 2.9 mtpa by Q4FY12
§ Adoption of cost cutting measures in the European business along with selling of non- performing assets and
focus on raw material integration
§ Continuous thrust on balance sheet restructuring with an aim of de-leveraging to offset near- term profitability
issues in European operations
Valuations
§ At the CMP of Rs 621, the stock is discounting its FY12E earnings by 7.4x and FY12E EV/ EBITDA by 5.2x
§ We value the Indian operation 6x FY12E EV/ EBITDA and European operation and other subsidiaries at
4xFY12E EV/ EBITDA to arrive at a target price of Rs 684/ share
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