Low Priced Scrip: WS Industries - 25% Profit Expected in One Year
Today we are experiencing a phase of precariousness in the stock markets, in unison with instability in the crude oil price. In such a situation what an investor should look at is a fundamentally stable company with a growth potential. We see huge potential in WS Industries and its business going forward. It manufactures high-voltage porcelain transmission and sub-station insulators and has an installed capacity of 8,000 MTPA of substation insulators and 10,000 MTPA of transmission insulators. Nearly 95 per cent of the transmission insulators manufactured are sold domestically. The substation insulator production is exported to OEMs like ABB, Siemens, and Areva.
At the current market price of Rs 55 the scrip is trading at a PE multiple of 8.25x for FY08. We expect it to post a topline of around Rs 274 crore and an EBIDTA of around Rs 46 crore and a PAT of Rs 18 crore in FY09. At FY09 estimates, it gives an EPS of Rs 8.5, which is much higher than the existing thereby generating a PE of around 6.4x. We recommend a “buy” for the scrip with a one-year price target of Rs 70, which represents an upside of 27 per cent from the current levels
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It will help readers to take a decision on your recommendations if you can provide some more details like P/BV ratio and Operating cash flows.