Initiating Coverage on ZF Steering - Motilal Oswal

ZF Steering ( ZFSG IN ; Mkt Cap USD 71 mn , CMP Rs 350 , Buy)

We initiate coverage on ZF Steering with a BUY recommendation for a one year target of Rs. 465 - 3.6xFY12 EV/EBITDA. Caution: Liquidity is low.

INVESTMENT ARGUMENTS

- Volume benefits from CV upcycle with added upsides if LCVs convert
- Key clients to see strong growth over FY10-FY12E
- Large Cash and Cash equivalent and strong ROE are positives
- Valuations are currently attractive at 6.7XFY11E and 6.0xFY12E earnings and a 3.4% dividend yield for FY12E. Valuations net of Rs.118 per share of cash are even more attractive.

Source : Equity Bulls

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