Buy Tourism Fin Corp, tgt Rs 47: Sharekhan
Sharekhan research has maintained buy rating on Tourism Fianance Corporation of India with target price of Rs 47, with 12-month prespective in their December 11, 2007 report. “The business fundamentals of the company have improved significantly on the back of capacity expansion in hotel and tourism sectors planned for the next three to four years. We expect TFCI’s earnings to grow at a CAGR of 50% over the period FY2007-10E, as it will undertake much higher volume of business after its capital raising in FY2008. At the current market price of Rs34 the stock is quoting at 9.8x its FY2009E earnings and 0.9x FY2009E book value. We believe the strong earnings growth coupled with a higher leverage will result in significant improvement in RoE (from 6.5% in FY2007 to 12.8% in FY2010E). This should help the company gradually trade at higher book value multiples in the region of 1-1.2x from the current 0.9x. Thus we maintain Buy recommendation on the stock with the revised 12-month price target of Rs 47 at which it would trade at 1.2x average of FY2009E and FY2010E book values,” according to Sharekhan report.
