TUBE INVESTMENT OF INDIA
RESEARCH:NOMURA
RATING:BUY
CMP: 148
Nomura continues to maintain `Buy’ rating on Tube Investment of India due to the strong competitive position of its businesses, good return ratios, high quality of management and attractive valuations. While the growth may slow down in FY12E as compared to that in FY11, it is still likely to be upwards of 15% as per current indicators and estimates. The company has been able to pass on the increase in raw material prices and is likely to maintain margins at least in the next one-two quarters. Oneyear forward P/E multiple of 13.5x on a standalone one-year forward EPS of 11.08 gives a value of 150/share. The one-year forward P/E multiple of 13.5x for the standalone business is justified as it is a highquality and high ROCE business where the company has dominant market share. Nomura has not assigned any value to the general insurance business, in which the company holds a 74% stake and held a market share of 2.3% in FY10.