Inox Leisure: On expansion mode

ANALYSTS' CORNER

BRICS PCG has recommended a "buy" on Inox Leisure with a target price of Rs 198. The company posted sales of Rs 102.07 crore displaying a y-o-y growth of 72 per cent for FY06. At Rs 17.5 crore, the company's net profit was up by 114 per cent.

Operating profit for the year rose by 75 per cent to Rs 36 crore. The operating margin for the year was 35.3 per cent as against 34.7 per cent in FY05.

Inox is expanding rapidly and has set up a new multiplex at Kota, Rajasthan which opened on June 16. BRICS PCG expects the company to register a revenue growth of 48 per cent y-o-y to Rs 1,600 crore, yielding a net profit of Rs 35.50 crore in FY07.

This translates into an EPS of Rs 5.9 based on a diluted equity base of Rs 60 crore.

In FY08, as the company operates with a larger base in terms of number of properties, it is expected to register a net profit of Rs 47.7 crore on revenues of Rs 220 crore, which works out to an EPS of Rs 7.9. Inox is currently quoting at 21.8x and 16.2x on FY07E and FY08E earnings of Rs 5.9 and Rs 7.9 respectively.

BASF India: Focus on exports

Anand Rathi has given a "buy" recommendation with a long term view for BASF India with a target price in the range of Rs 200-250.

BASF India, a 53 per cent subsidiary of BASF AG Germany, manufactures products like plastic and fibres, performance chemicals and agri-products which have good growth potential. India is becoming a sourcing hub for MNC chemical giants.

This will benefit domestic companies like BASF which can export to parent networks across the globe. For FY06, the company's net profit was up 20 per cent at Rs 45.41 crore.

Anand Rathi feels the valuations of the stock are tempting after the recent meltdown. At the current market price, the stock is trading at 9.8x its FY07 earnings.