Antique Stock Broking has a buy call on Kirloskar Pneumatic Company with a target price of Rs 1,175.The current market price of Kirloskar Pneumatic Company is Rs 880.Time period given by the brokerage is one year when Kirloskar Pneumatic Company price can reach the defined target.
View of the brokerage on the company:Kirloskar Pneumatic Company (KPC) is one of the strongest brands with a well-established products basket and proven capabilities.
The company has a lion's share in the refrigeration compressor market and is looking to tap the larger oil-flooded rotary screw compressor market through new products.
Incremental investment in the oil gas sector (with specific focus on increasing gas consumption) is expected to drive demand for KPC products.
Further, the government's thrust on cold storage, road construction, and exports is expected to aid the company's revenue growth.
We expect 23% earnings CAGR along with improving return ratios over FY18-20E.
Thus, we initiate coverage on KPC with a BUY and target price of INR 1,175, based on 20x FY20E earnings.