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Multi Baggers

Hem Securities

5.30 AM Jan 1st 1970

Kirloskar Ferro

BSE ID : 500245     NSE ID : KIRLFER

RECOMMENDED PRICE 65.40

PEAK FROM RECO 533.50 715.75%

CURRENT PRICE 544.65 Resource id #18

KFIL incorporated in 1991; is engaged in business of manufacturing pig iron and ferrous casting. We initiate a 'BUY' on the stock with a target price of Rs 85 with the medium to long term investment horizon.

Kirloskar Ferrous Industries Ltd

Kirloskar Ferrous Industries Ltd. (KFIL) is determined to maintain its position as market leader in Pig Iron and Grey Iron Castings business.

The company has registered excellent results for the quarter ending September 2014. The revenues from operations grew by about 20% to Rs.368.65 crores vs. Rs.307 cr. in the year ago quarter while it grew ~9% q-o-q. Operating profit climbed sharply by ~61% at Rs.46.43 crores as against Rs.28.86 crores in the previous year quarter. The adjusted net profit stood at Rs.20.23 crore for the quarter as against Rs.11.82 crore; registering a sharp growth of ~71%. On the margins front, operating margin climbed about 319bps at 12.59% as against 9.4% while net profit margin expanded 164bps at 5.49% from 3.85% y-o-y. EPS Stood at Rs.1.47.

KFIL has long standing relationship with major OEMs like Mahindra and Mahindra, Tata Motors, Toyota Kirloskar Motors etc. It has become preferred supplier to major auto manufactures providing castings.

Pig Iron sales of the company has witnessed sharp jump of about 29% in H1FY15 at 1,55,000 MT from 120000 MT in H1FY14. While Casting sales remained unchanged at 31,000 MT in H1FY15 vis-a-vis H1FY14. Similarly in value terms, Pig iron sales grew about 39% at Rs.426 crores as against Rs.306 crores in H1FY14. Casting sales grew marginally at Rs.254 crores vs Rs.234 crores in H1FY14.

Valuation

With long standing relationship with OEMs; improving operational efficiency and strong fundamentals; Kirloskar Ferrous Industries Ltd. growth prospects and profitability looks promising. We believe the company is trading at an attractive valuation at 15.8x and 11.66x of FY15EPS of Rs.4.14 and FY16EPS of Rs.5.61. We initiate a 'BUY' on the stock with a target price of Rs 85 (appreciation of about 30%) with the medium to long term investment horizon.

For full details, Click on the attachment.

Disclosure of Interest Statement - Company Name

1. Analyst Ownership of the Stock - No
2. Hem & its Group Company Ownership of the Stock - Yes
3. Hem & its Group Companies' Director Ownership of the Stock - Yes
4. Broking relationship with company covered - No

Disclaimer & Disclosure: This document is prepared for our clients only, on the basis of publicly available information and other sources believed to be reliable. Whilst we are not soliciting any action based on this information, all care has been taken to ensure that the facts are accurate, fair and reasonable. This information is not intended as an offer or solicitation for the purchase or sell of any financial instrument and at any point should not be considered as an investment advise. Reader is requested to rely on his own decision and may take independent professional advise before investing. Hem Securities Limited, Hem Finlease Private Limited, Hem Multi Commodities Pvt. Limited, Directors and any of its employees shall not be responsible for the content. The person accessing this information specifically agrees to exempt Hem Securities Limited, Hem Finlease Private Limited, Hem Multi Commodities Pvt. Limited or any of its affiliates or employees from, any and all responsibility/liability arising from such misuse and further agrees to hold Hem Securities Limited, Hem Finlease Private Limited, Hem Multi Commodities Pvt. Limited or any of its affiliates or employees free and harmless from all losses, costs, damages, expenses that may be suffered by the person accessing this information due to any errors and delays. The companies and its affiliates, officers, directors, and employees, including persons involved in the preparation or issuance of this material may from time to time, have long or short positions in, and buy or sell the securities there of, company (ies) mentioned here in and the same have acted upon or used the information prior to, or immediately following the publication. Analyst Certification The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the research analyst(s) was, is, or will be directly or indirectly related to the specific recommendations and views expressed by research analyst(s) in this report.

KirloskarFerrous_HemSec_Multibagger.pdf

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