IFB’s presence in marine business provides ample opportunity in the domestic as well as export markets due to the niche product categorization and presence of fewer competitors. Moreover, the recent preferential allotment, where the promoter has pumped ~'18cr (~13% of the current market cap), reflects promoters’ confidence in the company, Angel Broking said in a research report.
IFB’s new bottling and manufacturing capacity would complement the potential consumption opportunity and thereby facilitate revenue growth going forward. In addition, IFB is the only distillery player in West Bengal which would add to the company’s growth prospects, the report said.
The brokerage expects the company to post a CAGR of 19.5% and 15.1% in IFB’s revenue and net profit, respectively, over FY2013-2015. At the current market price of Rs 151, the stock is trading at a PE of 3.8x its FY2015E earnings and P/B of 0.6x FY2015E. We initiate coverage on the stock with a Buy recommendation and a target price of '198 based on a target P/E of 5.0x for FY2015E.
