Centrum Broking

Visaka Ind (Buy)

CMP: ₹437.05

Target: ₹950

Visaka Industries is engaged in the manufacture and sale of cement asbestos sheets, fibre cement sheets (V-boards), and panels and spinning (synthetic spun yarn). The company offers products, including cement asbestos products, fibre cement flat board products and textiles.

We hosted Visaka Industries’ (VIL) management for a non-deal roadshow. The management guided that good demand across all three business segments (ACS, CBP and Yarn) has accelerated growth outlook for FY19. However, the rupee depreciation during Q2FY19 and rising diesel prices will drag down ACS as well as total margin in Q2FY19. Management expects to pass on this cost increase during H2FY19, through price increase (aided by robust demand in ACS). VIL’s innovating and patented product — ATUM — is expected to go on sale from Q3FY19.

We remain positive on VIL owing to its strong positioning across all three business segments and reiterate ‘buy’ with an unchanged target price of ₹950.