Tuesday 11 November 2008

Buy Birla Corp, target of Rs 223: Motilal Oswal

Motilal Oswal has recommended a buy rating on Birla Corporation with price target of Rs 223, in its report dated October 31, 2008. "The on-going brownfield capex plans (1.7mt addition) is on track for completion by June 2009. The first phase of the Satna expansion plan completed during the quarter, increasing capacity from 6,300tpd to 7,400tpd. This expansion would be a key to volume growth in FY10 onwards. Also, the company is planning to set-up 3MT Greenfield unit at Madhya Pradesh."

"The stock trades at extremely attractive valuations of 1.9x FY09E EPS, 0.2x FY09E EV/ EBITDA and at EV/ton of USD 3 (on current capacity of 5.8MT), which is at a significant discount to its comparable peers. We believe the discount is not justified and valuations, based on earnings as well as replacement cost, are extremely attractive. Maintain Buy with target price of Rs 223 (3x FY10E EV/EBITDA)," says Motilal Oswal's research report.

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Source: Moneycontrol

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