Buy Kalpataru Power Transmission for target of Rs 1292 says Karvy Stock Broking
Karvy Stock Broking in its February 26, 2010 research report has recommended a buy rating on Kalpataru Power Transmission, with a price target of Rs 1292.
Karvy Stck Broking said “Though we incorporated above motioned revision in our earning estimates, we retain our valuation multiples for Kalpataru Power Transmission standalone as 16x on FY11 and 10x on FY11 for JMC projects. Therefore, we arrive at a target price of Rs 1332/share, marginally lower over previous target. However, owing to recent fall in stock price, we revise our rating on KPTL from Outperfomer to BUY. Currently KPTLconsolidated entity (along with JMC projects) is trading at 17x on FY10 and 12x on FY11 earnings. Effectively, our target price will be 15.5x on FY11 earnings”.
“As the fund raising exercise is subject to shareholders approval, we have not factored the same in our model and its subsequent impact on price target. However, retaining the same valuation multiple, on account of the equity dilution from QIP issue, our target price would come down by 3% to Rs 1,292/share.”