| JBF Industries: Trend Update & Recommendation With Polyster film prices improving significantly in last 6 months, we expect company's Dubai subsidiary - JBF RAK to report excellent results. Based on the suberb growth in PAT for JBF RAK and improving scene for Polyster Yarn also; we are revising our earnings estimate and price target for company. We expect consolidated EPS to cross Rs 70/- for FY'11 and raise the price target to Rs 250/- in next 12 months. · Company is leading Polyester chips & amongst top three players in Polyster Yarns also. Its subsidiary JBF RAK in Dubai, has 72,000 MTs capacity to produce PET[Polyster] films. · Company is gradually moving up in value chain from Polyester Chips maker to Yarn & Film maker. This is boosting the margins further. Now Polyester Chips forms just 32% of the sales, while rest 68% comes from value added products like Yarn & Films. · Now to integrate backward, to secure raw materials at cheaper cost, its subsidiary JBF RAK, Dubai is planning to set up a 1.2 mill MTs capacity of key input - PTA. This will be under JV with Oman oil [10% stake], who will provide Paraxylene [input for PTA]. · Funding of this project will be managed by JBF RAK by internal generation, QIP issue and Term loans. JBF RAK may be listed on Singapore exchange also.
Looking to improving fundamentals for Polyster Films and Yarns, we expect the performance of company should improve significantly in current year. We expect consolidated earnings of over Rs 70/- for FY'11 and raise the target to Rs 250/- . BUY. Safe Harbor Statement: Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints. Nothing in this article is, or should be construed as, investment advice. |
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