Buy Innoventive Industries - Dolat Capital

In the mid / small cap segment, we continue to maintain our positive stance on Innoventive Industries given its cost leadership in CEW tubes through pilgering process and its focus on innovation to develop new markets for its products.

- Innoventive has further expanded its product mix by acquiring 51% stake in Innovative Technomics Pvt Ltd (ITPL), an industry leader in high voltage soft starters and testing equipment. We believe this acquisition fits into Innoventive product profile as it is high margin, scalable and operates into a niche market.

- Innoventive has got the patent for its pilgering process in India and has started supplying its membrane panel strips to Alstom globally.

- Innoventive is expanding its distribution strength in developed markets through acquisition like Salem Steel in USA, which will help it establish markets for its CEW tubes and increase its margins.

- We expect IIL revenue CAGR of 23% and earnings CAGR of 30% over FY12-14E led by expansion in CEW tubes and strong traction in OCTG products and reduction in interest cost. We maintain our Buy on IIL with a price target of Rs.159 (7x FY14EPS)

Source : Equity Bulls

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