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Monday, October 17, 2011

Alfa-Laval (India) Ltd:-Buy/sell/growth prospects and recommendation,news and results,target price and analysis,view and outlook,multibagger

Scripscan:Alfa-Laval (India) Ltd
BSE code:505885

Story:Alfa Laval was one of our top bets in terms of delisting and we had a very simple rationale that the parent itself is buying companies across the globe at an annualized equivalent value of less than 11% and the stock was trading at 17%. It has got re-rated from Rs 1,100 to Rs 1,600 and we had an upper band target of Rs 1,800 and Rs 1,600 for last fiscal. Look at its numbers that it has posted, it is beautiful in terms of topline and bottomline.I was listening to different managements that are in USA and they are giving their guidance. They have given a very muted guidance. On the other hand if you look into Alfa Laval, they have recently given an order book update of 32% year-on-year (YoY) that is for the parent and I think given the Indian story far more superior than the globe, the growth in terms of topline would be close to that 40-45%. But there would be input pressure and the company would be doing somewhat around 25-28% in terms of bottomline. So for this fiscal, the company would be doing close to Rs 77-78.Now let me take a call on the parent’s recent acquisition of Aalborg Industries. They have paid an annualized equivalent value of close to 11.5-12%. That means the parent is still buying aggressively companies across the globe at the same valuation. So if a delisting news on this particular stock comes this year, the stock would go and test Rs 2500 as per my probabilistic model and even if it doesn’t, it is trading at just 20 times forward multiple when the parent itself is acquiring at close to 19 times forward across the globe. So this is one stock which is very comfortable in terms of dividends, it recently pay the good dividend and going forward, this is one story even if it is not delisted, definitely it is going to give returns year after year.

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