1 NDL share price target reports by brokerages below. See what is analyst's view on NDL share price forecast, rating, estimates, valuation and prediction behind the target. You may use these research report forecasts for long-term to medium term for your investment or trades in 2020.
Due to the uncertainty in the time frame regarding he narrowing of demand and supply, we have factored in realization (near to the realizations seen over FY14-15) and volume growth on a conservative basis (~4% in the period FY19-21E). Thesubsidy and GST credit benefits continue to keep the bottomline in a safety zone inthe current scenario. The stock trades at a 1 year forward P/E of 6.6x. On the back of low growth and return ratios expectation, we value the stock at a P/E 5x (above average -1sd (3.5x) over the last 5 years) on FY21E EPS of Rs. 8.1 and arrive at a target price of Rs. 41. Key risks are faster than anticipated pickup in demand and softening of cotton prices.
Our estimates indicate a RoCE of 8.6% and 9.3% for FY20E/21E, which is below the WACC of 9.4% resulting in target valuation at a steep discount to its last 5 year average multiple. Adding to the woes of demand is increase in cotton prices, which will further impact margins. As a result, we expect a margin decline of 379 bps in FY19 on YoY basis resulting in EPS degrowth of 53% over the same period. The subsidy and GST credit benefits continue to keep the bottomline in a safety zone in the current scenario. With longer period expected for the supply demand mismatch to narrow, we lower our target valuation to 5.5x on FY21E EPS of Rs. 7.3. Key risks are faster than anticipated pickup in demand and softening of cotton prices.
SOURCE: Data from D'Market via Quandl. Intraday data delayed 15 minutes.
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