Nilkamal – Initiating Coverage Research Report By Angel Broking

Outlook & Valuation: We expect the company’s Plastics business to post a CAGR of 11.5% (with an upturn in the economy) over FY2014-2017E, which will aid the company to post a revenue CAGR of 9.4%, over the same period, to `2,167cr. The EBITDA margin is expected to stabilize at 7.5% in FY2015E and improve to 8.1% in FY2017E. The debt for the company is expected to reduce by `62cr over FY2014-17E, resulting in lower finance costs. Consequently, the company would post a net profit CAGR of 17.5% over FY2014-17E to `65cr, as per our estimates. At the current market price, the stock is trading at FY2017E PE of 10.1x. We initiate coverage on the stock with a Buy rating and a target price of Rs. 566, based on a target FY2017E PE of 13x.

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