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Sushil Finance
TIL (Buy)
CMP: ₹409.55
Target: ₹600
TIL Ltd provides complete infrastructure solutions (including supplying of spare parts & after sales services). Its business is categorised into three business areas, which are Material Handling Solutions (MHS), Construction and Mining Solutions (CMS), and Power System Solutions (PSS). During FY11-14, despite sluggish business environment, TIL has maintained its leadership position in MHS division. However, its CAT business remained muted impacting overall growth and profitability. With improved demand environment for its MHS and CAT products, we expect TIL to deliver decent growth along with higher margins. The improvement in working capital cycle will lead to very strong growth in profitability over next 2-3 years. Going forward, we expect its consolidated revenues to grow by 15 per cent and 19.1 per cent in FY15E & FY16E respectively and its APAT to grow by 190.3 per cent and 108.8 per cent in FY15E and FY16E respectively. Given its vast experience and technical expertise in MHS business, long association with Caterpillar brand as a distributor, and inexpensive valuation, we reiterate our coverage on the stock with a ‘Buy’.
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