KS OIL
RESEARCH: BANK OF AMERICA
RATING: BUY
CMP: Rs 67.70
Bank of America initiates coverage on KS Oils with a `Buy' rating and target price of Rs 90, which implies 41% upside.
KS Oils is India's largest mustard oil producer and has quadrupled its market share to 11% since FY06.
BofA believes the company will grow through consolidation in the fragmented mustard oil market.
Since FY06, KS Oils has focused on the mustard oil segment and ramped up capacity 6x by building efficient plants. Its mustard oil brands, Kalash and Double Sher, have a strong presence in North and North East India with over 30% market share.
BofA expects the company to nearly double market share to 19% by FY12 led by efficient procurement and capacity utilisation and estimates 28% EPS CAGR over FY09-12 E as increased capacity contributes to revenue and margin improves 140 bps.
While capex to sales ratio is expected to halve to 6% versus ~13% in FY09 as high capex in oil business is behind, ~60% of its capex going ahead will be for palm plantations in Indonesia. The stock trades at 8x FY11E P/E and 5.2x FY11E EV/EBITDA.
s:ET
RESEARCH: BANK OF AMERICA
RATING: BUY
CMP: Rs 67.70
Bank of America initiates coverage on KS Oils with a `Buy' rating and target price of Rs 90, which implies 41% upside.
KS Oils is India's largest mustard oil producer and has quadrupled its market share to 11% since FY06.
BofA believes the company will grow through consolidation in the fragmented mustard oil market.
Since FY06, KS Oils has focused on the mustard oil segment and ramped up capacity 6x by building efficient plants. Its mustard oil brands, Kalash and Double Sher, have a strong presence in North and North East India with over 30% market share.
BofA expects the company to nearly double market share to 19% by FY12 led by efficient procurement and capacity utilisation and estimates 28% EPS CAGR over FY09-12 E as increased capacity contributes to revenue and margin improves 140 bps.
While capex to sales ratio is expected to halve to 6% versus ~13% in FY09 as high capex in oil business is behind, ~60% of its capex going ahead will be for palm plantations in Indonesia. The stock trades at 8x FY11E P/E and 5.2x FY11E EV/EBITDA.
s:ET
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