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Outlook for the Company
Stone India Ltd (SIL) is part of the Duncan Goenka Group engaged in the business of rail
products. SIL’s business segments include Carriage Business group, Locomotive Business
group and Train Power Business group supplying to the Indian Railways. SIL has posted
decent performance during the quarter ended 30th September 2010. The topline was
marginally below our expectations however margins were above estimates due to sharp
decline in Cost of goods sold as percentage of Sales. We continue to be positive on the
future prospects of the company and expect future growth to be driven by introduction of
newer products and tieup with RailRunner,U.S.A. At the current market price of ` 62, SIL is
available at valuation of 4.6x its FY12E EPS of ` 13.4. We initiated coverage with a BUY at
levels of ` 66 for initial target price of ` 87. We maintain our BUY rating on the stock at
current levels for target price of ` 87. We conducted a concall with the Management of
Stone India Ltd. Key highlights of the results and Concall discussions are summarized below.
