Financial Daily from THE HINDU group of publications
Sunday, Jan 22, 2006
Financial Daily from THE HINDU group of publications Sunday, Jan 22, 2006 |
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Investment World
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Stocks Markets - Recommendation Texmaco: Buy
THE stock of Texmaco holds upside potential from the current level of Rs 555. The stock trades at 20 times its FY06 per-share earnings. A substantial pick up in wagon demand, contribution from its steel foundry division (expected to go on stream in mid-2006) and the solid pick up in demand for its heavy engineering segment is expected to power growth for the next two- to three years. Texmaco could be a major beneficiary of the current wagon expansion programme of Indian Railways and Concor. The latter is to add 2,500 wagons to its fleet by March 2007. Having executed an earlier order from Concor in record time, Texmaco could expect to get a good share of Concor's order. The Government's decision to end Concor's monopoly could also throw up fresh opportunity in this segment in the long run. The company derives close to 50 per cent of its revenues from wagon building. The company has expanded capacity for its steel foundry division. This facility is also expected to prop up exports. This division recorded a 66 per cent growth in FY05. As of July 2005, it had an order book of close to Rs 600 crore, two times its FY05 revenues. The demand for its hydro-mechanical equipment has also shown robust growth. Buy with a one-to-two year perspective.
Sowmya Sundar
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