Buy Orient Paper, target of Rs 66: Emkay Global

Emkay Global Financial Services is bullish on Orient Paper & Industries (OPIL) and has recommended a buy rating on the stock with a target price of Rs 66 in its June 16, 2009 report. Orient Paper Q4FY09 pre exceptional net profit of Rs 629 million is above our estimates (Rs 500 million) driven by better than expected cement realizations. Net revenues grew by 23.3% yoy to Rs 4.67 billion driven by 20.9% revenue growth for cement division while the same for Paper division grewby 51.4% yoy.”

“We expect OPIL cost structure to witness significant transition with company expected to commission 50 MW of thermal captive power plant. Volume boost from cement capacity expansion to 5 mtpa by Q2FY2010 shall further fuel operating performance and improve cost structure with operating leverage coming in to play. We are upgrading our earnings estimate for FY10E by 12.4% to Rs 13.5 and are introducing our FY11E earnings at Rs14.4. At the CMP of Rs 55, the stock is trading at undemanding 4.1x FY10E earnings. We continue to remain bullish on OPIL transition to mid size efficient cement player. Value of non cement business (Rs 6/share) and investments (Rs 2.2/share) provide significant margin of safety. Maintain our ‘BUY’ rating on the stock with a revised price target of Rs 66,” says Emkay Global Financial Services’ research report.

source: Moneycontrol

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