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Centrum Broking
Vesuvius (Hold)
CMP: ₹1,293.80
Target: ₹1,215
Vesuvius is a community of experts. Present around the world, Vesuvius deliver solutions to customers to improve their efficiency. The services Vesuvius offers encompass design and engineering, products and operations management. Its global network of plants brings Vesuvius within reach of its customers, serving them in real time, with the capacity and flexibility they need to their markets’ demands.
We retain our ‘Hold’ rating and target price of ₹1,215 on Vesuvius India.
Q1CY17 performance was in line with strong growth of about 28 per cent each at Revenue/EBITDA level led by higher business activity at large mills. We expect the robust earnings growth to continue, led by i) continuation of solid pick-up in volumes from large mills coupled with operating leverage benefits; ii) addition of new product segments such as cement; and iii) establishment of the R&D centre in CY17E.
Stock trades at rich valuations of 24.3x CY17E P/E thereby factoring the future earnings growth fully and limiting upside in our view.
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