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|Summary||Date||Stock||Broker||Price at Reco.||Target||Price at reco|
Change since reco(%)
|2015-11-07||Surya Roshni Ltd.||Angel Broking||126.80||183.00||126.80 (64.20%)||Target met||Buy|
Surya Roshni (SRL) reported a decent set of numbers for 2QFY2016. Its top-line grew by 4.3% yoy to Rs722cr led by a superb performance by the Lighting division. The EBITDA margin witnessed a slight decline of 36bp yoy to 7.8% on account of higher employee and other expenses. However, the same was mostly made up by a 244bp yoy decline in raw material cost to 70.3% of sales. The interest cost declined by 16.3% yoy to Rs24cr and as a result, the net profit grew by 3.7% yoy to Rs13cr vis--vis our estimate of Rs17cr. Structural shift in the Lighting industry presents new growth opportunity: We expect SRL to benefit from the structural shift in the lighting industry towards LED lighting, which is expected to grow at a CAGR of 28% over FY2015E-21E. SRL is the second largest lighting company in India with a market share of ~ 25%. With demand for LEDs expected to rise, the company would be a key beneficiary, given that the companys Surya brand is well recognized and has superior market reach with its 2 lakh plus retailers. Higher contribution from Lighting division to boost margins: SRLs Steel Pipes business, entails low profitability and has...