Buy GMDC - Motilal Oswal

Motilal Oswal has given a Buy call on GMDC at the current market price of Rs.190 with a target price of Rs.232.

GMDC has lignite mines with ~15cr tonnes of reserves. Lignite, Bauxite and Power were 76%, 5% and 18% of revenues. GMDC is the only company in Gujarat licensed to sell lignite and enjoys good visibility of volume and pricing growth because of lack of competition.

The company has healthy EBIDTA margin of ~45% and very strong cash generation.

At current price of Rs.190, the stock is quoting at a P/E of 10x on FY13e earings. BUY with a target of Rs.232 (12.5xFY13E).

Source : Equity Bulls

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