PINC Update – Maintain 'BUY' on HSIL

We met the management of HSIL. The key takeaways from the meeting which reconfirm our positive view on the stock are:- (1) Strong revenue growth in both the building product and container glass segments. We expect Q3FY12 revenue growth of 28-30%. (2) Expansion on schedule for both the Sanitary and Glass division. Brownfield expansion of 425 tpd furnaces (glass) in Bhongir is likely to fire up by Jan'12. (3) Improvement in margin in H2FY12 on implementation of 6.5% (Nov'11) price hike in Sanitary products and expected price hike in Glass division of 6-6.5% from Jan'12 onwards.

We reiterate our BUY recommendation on the stock with a TP of Rs270 on the back of its strong growth. At the CMP of Rs139, the stock discounts FY12e and FY13e EPS of Rs20 and Rs27.3 by P/E of 7x and 5x respectively. It is trading at 4.4x and 3.5x on EV/EBIDTA basis for FY12e and FY13e respectively.

Source : Equity Bulls

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