Buy Asian Electronics; target of Rs 638: P Lilladher
Prabhudas Lilladher research has recommended buy rating on Asian Electronics in its December 7, 2007 report. “Asian Electronics (AEL) is in possession of an unique technology, which enables conversion of plastic waste to fuel. The company is also attempting to use the same catalyst for converting refinery sludge into oil, for which the company is presently conducting live trials. Considering the high price of crude and lucrative profit margins, we believe this could lead to significant growth for the company. AEL is expected to report revenue CAGR of 59.3% over FY07-10E and PAT CAGR of 83.4% over the same period. At the CMP of Rs 460, the stock trades at 10.8x FY09E and 6.9x FY10E earnings of Rs 42.6 and Rs 66.2 respectively. We have factored in revenue from ‘plastic to fuel’ business, but not from its refinery sludge conversion. If commercially successful, it could be a huge potential for the company and there could be significant upside to our current estimates. We initiate coverage on AEL with BUY rating and a target price of Rs 638 on base case scenario, an upside of 39% from current levels, “ according to Prabhudas Lilladher research report.
