Religare Securities has recommended buy rating on Sujana Towers with a target price of Rs 208. The tower business is valued at Rs 157 and the metals business at Rs 51. The target price for teh tower segment has been arrived at by discounting the tower business at 10x on FY08E earnings of Rs 15.7 making it attractive considering that the other transmission players trade within a range of 11-16x.
The revenues of Sujana Towers has increased by 44% to Rs 4.4 billion in FY07 against Rs 3.1 billion in FY06 due to capacity additions which raised production to 9000 tpm. The operating margin has improved by 410 bps to 14.6% due to in house raw material supply and better operating efficiency. Depreciation cost has been increased by 28.9% to Rs 66.2 million in Fy07 on account of the additional capex of Rs 850 million undertaken by the company during FY06-FY08.
The PBT of the company rose 43.2% and PAT was up 15.6% in FY07. The company is expected to post a PAT CAGR of 65.8% to Rs 610 million over FY06-FY08.
The revenues of Sujana Towers has increased by 44% to Rs 4.4 billion in FY07 against Rs 3.1 billion in FY06 due to capacity additions which raised production to 9000 tpm. The operating margin has improved by 410 bps to 14.6% due to in house raw material supply and better operating efficiency. Depreciation cost has been increased by 28.9% to Rs 66.2 million in Fy07 on account of the additional capex of Rs 850 million undertaken by the company during FY06-FY08.
The PBT of the company rose 43.2% and PAT was up 15.6% in FY07. The company is expected to post a PAT CAGR of 65.8% to Rs 610 million over FY06-FY08.
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