TRACTORS INDIA LTD (TIL) report by Kotak Sec PDF link

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��



http://www.kotaksecurities.com/pdf/dmb/MorningInsight24052012.pdf



TRACTORS INDIA LTD (TIL)
PRICE: RS.248 RECOMMENDATION: REDUCE
TARGET PRICE: RS.225 FY13E P/E: 8.3X
 TIL has been observing sluggish demand across power system and construction
divisions. Muted public spending in various infrastructure
projects viz. roads, power, mining has been affecting company's business.
 Construction and mining division has been severely affected and have resulted
in substantial increase in finished goods inventory. Working capital
has been soaring through FY12 on account of increasing receivables.
 Managements expects revenue pick up and operating margins to remain
under pressure over the next two quarters due to 1) volatility in war
material prices 2) inability of the company take price hike on Caterpillar
products.
 Demand in Material handling division (MHS) has been steady through
FY12. Management expects meaningful contribution from the segment
going ahead.
 We expect the company and peer group business to remain under pressure
over next two quarters. Rising interest rate and input price trend
would remain the key variable to monitor.
 We reduce our earnings estimate for FY13 to factor in 1) delay in government
infrastructure projects 2) increasing input prices 3) rising interest
rate scenario.
 We maintain our 'REDUCE' rating on the company's stock with a one year
DCF price target of Rs 225 (Rs 310 earlier).