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Buy Shanthi Gears, target of Rs 65: Sushil Finance

Posted on: June 26th, 2009 and is filed under Brokerage Recommendations.

Sushil Finance has recommended a buy rating on Shanthi Gears, with price target of Rs 65, in its report dated June 22, 2009.

“On back of the tough business environment, Shanthi has taken measures to revamp and restructure the entire operational and organizational structure, which may lead to scaling down of plant operations, cutting back its personnel and administration costs and a re-look at all the contracts. Shanthi has moderated its capital expenditure plans and may spend only Rs 250-300 million in FY 10. Shanthi has the highest margins in the peer group and the return ratios are also considerably high. Capital intensity in its Business is not very high leading to high cash generation. At CMP of Rs 46, the stock is trading at a valuation of 1.4x its FY11E ABV & 8.4x FY11E Earnings. Buy the stock with target of Rs 65,” says Sushil Finance’s report.

source: Moneycontrol

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