Karvy Stock Broking has recommended a sell rating on Mercator Lines, with a price target of Rs 23, in its report dated May 21, 2009.
“For FY09, consolidated revenue increased 51.9% to Rs 22 billion and profit increased by 56.9% to Rs 4.13 billion, translating into EPS of 14.7. At current price of Rs 57, the stock is trading at 3.6xFY2009 and 24.9xFY10 earnings and EV/EBIDTA it is trading at 3.7xFY09 and 7.9xFY10E. Considering significant (75 to 85%) decline in freight rates on YoY basis and expected lower earnings, we maintain our valuation to 30% discount to NAV with target price of Rs 23. We are revising our rating from underperformer to ‘SELL’ due to 73% increase in stock price since our last update on 29th April 2009,” says Karvy Stock Broking’s report.
Related posts: