Buy Phoenix Lamps, target of Rs 250: PINC Research
PINC Research has recommended a buy rating on Phoenix Lamps with a target of Rs 250 in its March 27, 2008 research report. “We expect net sales to grow at 30% CAGR over FY07-10. Primarily led by CFLs coupled with incremental revenues from luminaires, this should result in revenues of Rs 6.6 billion for FY10. Though pricing pressure in CFLs could be a drag on realisations, increase in own brand sales, strong replacement demand, backward integration and tax benefits from Haridwar facility should stabilise margins at 17-18%. Thus despite a capex of Rs 550-600 million, which could spike up its capital charges, Phoenix should able to exhibit an earnings growth of 35% CAGR for FY07-10. The company is also looking at inorganic growth opportunities & any significant developments on the same could provide singnificant scale to its business”
“The CMP of Rs145 discounts FY10E EPS of Rs28.7 by 5.1x and the stock trades at anEV/Sales & EV/EBIDTA of 0.7x & 4.1x FY10E. We initiate coverage on the company with a ‘BUY’ and a 12-month price target of Rs 250, “says PINC’s research report
