Friday 7 November 2008

Buy Punj Lloyd, target of Rs 318: HDFC Securities

HDFC Securities has recommended buy rating on Punj Lloyd with a target price of Rs 318, in its November 07, 2008 report. “We believe Punj Lloyd reported robust Q2FY09 numbers, which were far better than our expectations, answering medium term concerns on PLL’s numbers. Also given that the overall business momentum is intact, we believe the margin for disappointment is minimal. Hence, we are keeping our estimates unchanged and are quite confident about its growth in FY09E and FY10E.”



“With the new orders, PLL’s Book-to-Bill ratio stands at 2x FY09E revenues. We expect revenue growth of CAGR 29.4% over FY08-10E and a net profit growth of CAGR 37% for the same period. Presently, the stock trades at a PER of 12x & 9x our FY09E and FY10E EPS estimates respectively. With the historical overhang on provisions related to SEC and recent write-offs in Q4FY08 such incidents cannot be ruled out in future as these orders are yet to be completed. We are however cutting our target price to Rs 318 (from Rs 475 earlier) with a target P/E of 15x FY10E compared to 20x earlier and maintain our BUY rating on the stock. We are not valuing anything from its shipyard business as the chances of listing Pipapav Shipyard looks bleak given current bad market conditions,” says HDFC Securities' research report.

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Source: Moneycontrol

Posted by Harsh at 07:35

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