Financial Daily from THE HINDU group of publications
Sunday, Nov 02, 2003
Financial Daily from THE HINDU group of publications Sunday, Nov 02, 2003 |
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Investment World
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Stocks Markets - Recommendation Elgi Equipments: Buy Sowmya Sundar
INVESTORS can consider fresh exposures in Elgi Equipments. Business Line had recommended a `buy' on the stock at Rs 24 in May. We reiterate our buy on the stock in the light of consistent performance, notable rise in operating margins and the fresh opportunities thrown in by contract manufacturing for international OEM's. At Rs 62, the stock trades at 12 times its trailing 12-month per share sustainable earnings. Elgi had entered into an agreement for contract manufacturing with a US-based fortune 500 company, which would generate Rs 15 crore revenues annually for the company. This order assumes significance as it opens up a fresh avenue for export growth in the outsourcing business for the Rs 220-crore company. The prospects of securing further outsourcing contracts from the same company or even other international companies appear bright. Moreover, Elgi has been consistently expanding margins over the last three quarters and has not compromised on margins for outsourcing contracts too.
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