Recommendation: Buy (again!!! J)
CMP = Rs 432
Price target: Rs 575
Key points:
- For CY2007 ESAB India has reported a healthy 19.4% growth in its sales and a 25.2% rise in its profits. The company continues to grow at a robust rate owing to the government's thrust on infrastructure development. ESAB India remains a leader in the welding products industry.
- The consumables business recorded a growth of 16.7% for the full year on account of a good volume growth with marginally better realisations except for the wire segment where price continues to be under pressure. The equipment business reported an increase of 26.8% in revenues while its earnings before interest and tax (EBIT) margin reported a healthy increase of 360 basis points on account of operating leverage.
- Overall, the company improved its operating profit margin by 70 basis points to 23.3%.
- During the year, Charter Plc, its parent company, increased its stake in ESAB India by acquiring shares from the open market at a price of Rs 505 per share, taking the total holding to 55.56% from 37.31% earlier.
- The outlook on ESAB India remains positive. The hectic activity in
- Being the market leader ESAB India is expected to make the most of this boom. I maintain strong Buy recommendation on the stock with a price target of Rs 575.
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