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Centrum Wealth
Everest Ind (Buy)
CMP: ₹363.50
Target: ₹440
We are positive on the Everest Industries’ (EVI) pre-engineered building (PEB) growth outlook following the pre-IPO analyst meet of PEBS Pennar.
The Indian PEB industry expanded at 20 per cent CAGR during FY09-14, reaching a market size of ₹5,500 crore by the end of FY14. Over the next three years, the industry size is expected to reach ₹9,200 crore at 19 per cent CAGR. Currently, India is the third-largest PEB consumer globally, with about 11 per cent market share. The US and China are ahead of India, with 30 per cent and 16 per cent market share, respectively. India and China are expected to expand at 15-20 per cent CAGR in the next five years, driving the global PEB industry’s 12 per cent CAGR.
EVI’s plants are strategically located to capitalise on industrial growth expected in the Delhi Mumbai Industrial Corridor, going forward. EVI’s Dahej facility was commissioned in Q4FY15 and has the capacity to execute more complex projects (than its Roorkee plant), reducing outsourcing and driving margin expansion. The Dahej facility will also drive EVI’s business expansion in the western and southern regions.
We expect its building materials segment’s (asbestos roofing and cement boards & panels) EBITDA to increase at 15 per cent CAGR in the same period.
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