We at GEPL have been recommending Indian Hume Pipe to our investors from 280 levels and repeated it on couple of ocassions. We are once again giving a buy call on Indian Hume Pipe at the current levels of Rs.750.
Indian Hume Pipe is engaged in the manufacture and laying of pipes applicable in infrastructural activities such as water supply, drainage and sewage systems to mention a few. IHP’s product portfolio comprises of a broad range of products such as prestressed concrete pipes both cylindrical and non cylindrical, bar wrapped cylindrical pipes and reinforced concrete pipes.
We believe that IHP would be one of the players who stands to gain on acount of Govt’s towards of Infrastructural development cross the country.
For FY 10, Indian Hume Pipe’s revenues increased marginally by just a percent but company’s EBITDA margins increased from 7.8% in FY09 to 11% in FY10. In absolute terms company’s EBITDA profits increased from Rs.51.7 cr in FY09 to Rs.74.2 cr in FY10. Company’s profits after taxes in FY10 increased by 34% on yearly comparison to Rs.28.6 cr.
We expect the growth momentum to in revenues to pick up in FY11 with stability in margins as well. Hence we believe Once can consider investing in Indian Hume Pipe with a target price of Rs.1125.