Analysts' corner

RAINBOW PAPERS
Current price: Rs 50
Fair value: Rs 49
CRISIL Equities has assigned fundamental grade of 3/5 to Rainbow Papers (Rainbow) indicating ‘good’ fundamentals relative to other listed equity securities. Rainbow has completed the first phase of its expansion plan in FY10, which has almost doubled its capacity to 183,000 tpa from 100,000 tpa. After the completion of its second phase in Q1 FY12, it will become the sixth largest paper manufacturer in India with an installed capacity of 303,000 tpa. Rainbow has also changed its product mix to produce more high-value writing and printing, and newsprint paper. Rainbow’s revenues should grow at a three-year CAGR of 46 per cent to Rs 830 crore in FY13, while EPS is expected to increase to Rs 11.8 in FY13 from Rs 2.7 in FY10. CRISIL Equities has assigned a PER of 5 to FY12 EPS of Rs 9.8 to arrive at a one-year fair value of Rs 49 per share.

—Crisil Equities