Tractors India Limited (TIL)’s current valuations appear favorable vis-à-vis the potential growth in revenues: At current price of Rs.730, Tractors India Limited (TIL)’s stock is trading at 10.8x and
9.3x P/E and 5.6x and 4.8x EV/EBITDA multiples for FY11E and FY12E respectively. We value Tractors India Limited (TIL) using DCF valuation methodology that derives a price target of Rs.900 per share, implying an upside of 24% over a 12- month horizon. Our DCF model employs a WACC of 12.05%, beta of 0.9 and terminal growth of 3%. At our target price of Rs900, the stock of Tractors India Limited (TIL) would trade at 13.3x
FY11 EPS and 11.4x FY12E EPS of Rs67 and Rs.79 respectively.
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