In the past month, since our initiating coverage report dated March 05, 2009, the stock price has moved up 18% vs. a 31% rise in Sensex. We believe that there is no justification in the price increase as the company’s fundamentals remain unchanged.
Our target of Rs315 captures all the expected volume growth at the Mundra port. Our valuations are based on a 19% CAGR volume growth between FY09-FY12, including a 25% y-o-y growth in FY09 (FY09, 36.1 MnMT) significantly outperforming the industry growth of 2.1%.
We, however, believe that any potential upside from our target price would be from incremental sale or lease of SEZ areas. We have valued MPSEZ on SoTP basis.
We maintain our SELL recommendation with a target price of Rs315, a downside of 17% from current levels.
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