Action Construction Equipment, Outperformer

Action Construction Equipment, Outperformer

Results in line

Price Rs462 Target Price Rs642

Implied Upside 38.9%

Valuation: At the ruling market price of Rs462, the stock trades at 16.3x

FY09E and 11.5x FY10E earnings of Rs28.4 and Rs40.1 respectively. With demand for construction equipment growing at a fast pace and with new high margin products to be launched soon, we expect ACE to report revenue CAGR of 39.7% and earnings CAGR of 53.5% during FY07-10E. We maintain Outperformer rating on the stock with a target price of Rs642, implying an upside of 38.9%.

Source: PL, January 25, 2008