Anand Rathi has given Buy recommendation for Visaka Industries with a target price of Rs. 850 in its research report issued on Nov 16, 2021
Anand Rathi’s research report on Visaka Industries
Healthy V-Next products and a stabilising yarn division helped a seasonally weak Q2. Higher costs are expected to be temporary, and price hikes of AC roofing sheets would help. The expansion (AC roofing sheets, boards) is ending, and phase-II capex will be for the recently launched green products. We retain a Buy rating, at a TP of Rs.850 (earlier Rs.1,079) Expansion to boost growth. AC roofing sheets operated at 72% capacity; V Next at a healthy 94%, leading to the BP division revenue growing 19% y/y to Rs2.4bn. Higher costs, though (cement/pulp/logistics, etc.), hurt margins, which fell 602bps to 13.4%. The 100,000-ton expansion of AC roofing sheets by Jan’22 (and 50,000 tons of boards by Dec’21) would address higher demand generated by a good monsoon and improving rural demand.
We introduce FY24e and retain our Buy rating, with a TP of Rs.850, assigning a 9x multiple to FY24e EPS.