BRICS put "Buy" on Asian Elect

BRICS Securities has recommeded a "Buy" on Asian Electronics.

At the current price of Rs 540, Asian Electronics (AEL) is trading at 6.6xFY07E consolidated earnings of Rs 82.4.

"With the synergies from various strategic alliances (especially from the joint venture with Westinghouse) flowing in from the current financial year, sales and earnings are expected to grow by 51% and 58%, respectively.

"Considering this, BRICS has a BUY recommendation on the stock," the report said.

AEL reported net sales of Rs 57.3 crore on a standalone basis in Q4FY06. The consolidated total income for FY06 (including income from Asian Raymond Lighting which was taken over by the company) was Rs 180 crore. The company posted a net profit of Rs 25.23 crore for the year. Sales grew by 72.2% over FY05 whereas operating and net profit rose 61.2% and 134.3%, respectively. The surge in earnings was due to a lower-than-expected tax liability for the year. The company's strong overall performance was primarily driven by the greater acceptance of its lighting products in the overseas markets, the report said.