Action Construction Equipment Research Report By Angel Broking

Compelling valuations at current levels: We are optimistic that ACE would be able to maintain its numero uno position in the domestic Pick and Carry cranes segment. Further, the company’s wide range of product offerings, wide pan-India distribution network, and recent cost cutting initiatives, put ACE in a strong position. Given the backdrop of strong earnings growth and RoE expansion, we assign a P/E multiple of 14.0x to our FY2017E EPS of `3.9 and arrive at a price target of `54 for the stock. Being a turnaround story, we alternatively checked ACE’s stock on EV/sales multiple. At target P/E multiple of 14.0x, the implied FY2017E EV/sales multiple comes in at 0.75x, which is comforting. Given the 28.4% upside from the current market price of the stock, we initiate coverage on ACE with a BUY recommendation.

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