Thursday, 30 October 2008

Hold Grasim, target of Rs 1012: Emkay Global

Emkay Global Financial Services has recommended a hold rating on Grasim Industries with target of Rs 1012 in its OCtober 27, 2008 research report. "Standalone revenue for the quarter stood at Rs 27 billion up 9%, driven by a strong 17.2% growth in cement revenues (Rs 15.91 billion) and a 44.7% growth in sponge iron revenues (Rs 3.04 billion). The pre-exceptional net profit of Grasim declined by 15.3% yoy to Rs 4.23 billion while the reported net profit (adjusted for Rs 37 million depreciation on revised estimated useful life of assets) increased by 16.1%."

"The management has shared a grim outlook for company as well as the industry as whole sighting expected deceleration of demand growth from 9-10% to 7-8% and expected oversupply of cement on account of capacity addition. We are downgrading our earnings estimates for FY2009E and FY2010E by 10% and 23% respectively. At the current levels, the stock is trading at 4.3x FY2009E earnings and 2.3x FY09E EBITDA. We are changing our rating on the stock from BUY to HOLD with a revised price target of Rs 1012," says Emkay Global Financial Services' research report.

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Source: Moneycontrol

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