Buy Ess Dee Aluminium: PL

MUMBAI: Prabhudas Lilladher has put out a ‘buy’ recommendation on Ess Dee Aluminium with a price target of Rs 353.

The company’s results were better than expected and Q3FY10 revenue was below our expectations, it said.

“Due to the company’s lower operating margin as compared to the standalone, we see a marginal improvement in its consolidated operating margin from 29% to 30.4% YoY,” PL said.

“We expect EDAL to report a 32.5% CAGR in net sales and 28% CAGR in net profit over FY09-FY11. We expect its EBITDA margin to come back to 25% (similar to that in FY09) in FY11 due to a faster turnaround of IFL,” it said.

At the current market price of Rs361, the stock is trading at 9.3x FY10E, 6.9x FY11E and 5.6x FY12E.