Brics PCG: 'Buy' Rico Auto

Brics PCG recommends 'Buy' on Rico Auto at Rs 71 with a target price of Rs 103.

Though the company's revenue growth in Q1FY07 was  below expectations, its EBIDTA margin remained in line with estimates though net profit declined by 23.5% yoy and 10.8% qoq to Rs 71.5 mn.

The broking firm has revised its earnings estimates downwards
 by approximately 7.6% and 7.4% for FY07 and FY08 respectively to incorporate slower sales growth.  The stock is discounting its consolidated FY08E earnings by 10.6x and cash earnings by 6.8x.