I am new to investing. I am trying to anylyse this -->
At the current market price of Rs107, the stock is quoting at a PE of 18x FY2005E EPS of Rs6.1 and 11x FY2006E EPS of Rs9.9. We understand that the company valuations are fairly moderate as against its expected CAGR earnings growth of 41% over FY2006. Further, RoCE is expected to improve from 8.7% in FY2004 to 13.9% in FY2006. We recommend Buy with a 12-month target price of Rs135, which implies a PE multiple of 14x FY2006E earnings.
Can Somebody explain me how 12 month target price was calculated in the above case. If possible please provide the detailed explanation.
Thanks,
bomma
At the current market price of Rs107, the stock is quoting at a PE of 18x FY2005E EPS of Rs6.1 and 11x FY2006E EPS of Rs9.9. We understand that the company valuations are fairly moderate as against its expected CAGR earnings growth of 41% over FY2006. Further, RoCE is expected to improve from 8.7% in FY2004 to 13.9% in FY2006. We recommend Buy with a 12-month target price of Rs135, which implies a PE multiple of 14x FY2006E earnings.
Can Somebody explain me how 12 month target price was calculated in the above case. If possible please provide the detailed explanation.
Thanks,
bomma