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GUJARAT APOLLO LIMITED (GAL)
PRICE: RS.128 RECOMMENDATION: BUY
TARGET PRICE: RS.170 FY13E P/E: 7.1X
q GAL Q2FY12 results are in line with our estimates. Margins decline YoY
on account of higher input prices. Company has taken few price hikes to
partly pass on the raw material pressure to its customers. This is likely to
get reflected in 2HFY12.
q Lower sales in Subsidiary 'Apollo Earthmovers ltd' that deals in MEG
(Mobile Equipment Group) is attributed to the inability of BS II and BS III
engines that has led to the temporary production halt in the quarter.
q Equipment manufacturers have recently started to experience a slight
pick up in business activity. Recently NHAI has also expedited its process
of allotment of new road contracts. This is likely to auger well for the
company and the peer group in the medium term.
q We lower our estimates for FY12 to account for 1) operating margin pressure
due to commodity price inflation 2) increase in interest rate affecting
working capital financing.
q We recommend 'BUY' with a one year DCF based revised price target of
Rs 170 (Rs 195 earlier).
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
GUJARAT APOLLO LIMITED (GAL)
PRICE: RS.128 RECOMMENDATION: BUY
TARGET PRICE: RS.170 FY13E P/E: 7.1X
q GAL Q2FY12 results are in line with our estimates. Margins decline YoY
on account of higher input prices. Company has taken few price hikes to
partly pass on the raw material pressure to its customers. This is likely to
get reflected in 2HFY12.
q Lower sales in Subsidiary 'Apollo Earthmovers ltd' that deals in MEG
(Mobile Equipment Group) is attributed to the inability of BS II and BS III
engines that has led to the temporary production halt in the quarter.
q Equipment manufacturers have recently started to experience a slight
pick up in business activity. Recently NHAI has also expedited its process
of allotment of new road contracts. This is likely to auger well for the
company and the peer group in the medium term.
q We lower our estimates for FY12 to account for 1) operating margin pressure
due to commodity price inflation 2) increase in interest rate affecting
working capital financing.
q We recommend 'BUY' with a one year DCF based revised price target of
Rs 170 (Rs 195 earlier).
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