Pennar Industries Ltd. | Maintain BUY rating on the stock with TP of Rs 81

Management Meet Update | Pennar Industries Ltd. | Maintain BUY rating on the stock with TP of Rs 81 | We initiated BUY on Pennar Industries Ltd. (Pennar) at Rs.47/share on September 5th 2014. Since then the stock has touched 52 week high price of Rs.68/share on January 20th 2015. In order to get the latest update we visited the management of Pennar Industries Ltd.

Outlook and Valuations: Overall we remain positive on the outlook of the company on account of 1) High growth business of Pre-engineered buildings 2) Separate listing of PEBS (74% subsidiary) can act as additional trigger point for the stock price of the company 3) company’s gradual transition from pure commodity player to value added player-which is helpful in margin expansion 4) Company’s presence in diverse sector of the economy like automobile, infrastructure, railways etc. 5) Strong order books in railway and solar businesses. However, going ahead; growth in tubes and industrial component businesses of the company will be key thing to watch out (due to their lacklustre performance in 9MFY15). Muted performance in this segment can drag down the overall performance of the company. At CMP of Rs 48, Pennar industries is trading at FY16E and FY17E, PE multiple of 9.4x and 6.4x, respectively. We maintain BUY rating on the stock with TP of Rs 81 (11x FY17E EPS). (IndiaNivesh report)