Hold Indian Hume Pipe Company Ltd For Target Rs.257 - Sushil Finance
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HIGHLIGHTS FROM THE QUARTER:
* The Indian Hume Pipe Company Ltd (IHP) reported a total income of Rs. 291.1 cr, for the 1st quarter of the financial year 2021-22 as against Rs. 217.7 cr, in the corresponding quarter of the previous year.
* The Company has reported an EBIDTA of Rs. 23.0 cr as against Rs. 13.4 cr reported in the corresponding quarter of the previous year.
* The Company's net profit for the current quarter of Rs. 4.7 cr as against net loss of Rs. 5.5 crore reported in the corresponding quarter of the previous year.
* In current quarter, EBITDA of the Company was affected due to abnormal increase in material cost and disruption in supply chain management, affecting execution of projects at some project sites due to partial lockdowns to contain second wave of COVID-19 pandemic.
* The estimated balance value of the work as at 31st July, 2021 is Rs. 4,651.5 cr as against Rs. 4,445.0 cr as at 18th August, 2020. The Company is L1 in one project having value of Rs. 162.2 cr as at 31st July, 2021.
OUTLOOK AND VALUATION
As a result of the strong order book as on July 2021 and looking at the performance of the company in Q1FY21, we estimate the company’s revenue will grow by 12% to Rs. 1,390.4 cr with an EBITDA, PAT and EPS of Rs. 178 cr, Rs. 76.8 cr and Rs. 15.86 respectively in FY22. Hence, by assigning an EV/EBITDA multiple of ~10X we have arrived at a target price of Rs. 257 (~+15%) within an investment horizon of 8-12 months which makes the recommendation a “HOLD”.
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