Motilal Oswal: Buy KS Oils

Motilal Oswal Securities recommends a Buy on KS Oils at the current market price of Rs 150. They expect a post 1:1 bonus price target of Rs 134.

The board of KS Oils has approved the acquisition of an edible oil plant at Jodhpur as well as a tie-up for a similar plant in Alwar, both in the state of Rajasthan.

The company will require Rs 25 crore for acquisition and capacity expansion. The company currently operating at 40-45% capacity utilisation plans to elevate the same to 60% to meet the demand from its retail customers.

KS Oils has established itself as a leading player in the mustard/rapeseed oils sector and holds a strong position in the refined oils and vanaspati segments.

It is further expected to increase its profit margins and widen its existing share in the domestic market via a greater focus on retailing and its inorganic growth plans.

Moreover, with the edible oils sector expected to receive a boost through enhanced government support, it appears to be an attractive investment option.