The board of Numeric has decided to meet on 22nd August 09 to consider issue of bonus shares. The ratio of bonus shares entitlement would be decided in the meeting.
We feel that issue of bonus shares is only an accounting entry whereby new shares would be issued free of cost to the existing shareholders by debiting the reserves.
This does not lead to any change in its fundamentals or valuation although this increases the absolute number of shares available for trading.
We remain positive on the long term growth prospects of Numeric due to its market leadership position in the growing UPS Industry in India and foray into high growth solar energy business.
We maintain our earnings estimates for Numeric and expect it to report consolidated EPS of Rs80.0 in FY10E.
At Rs492, Numeric trades at fair valuations of 1.2x book value, 6.1x earnings and 5.6x cash earnings based on FY10E.
However due to recent sharp run up of 38% and the fact that our price target has been achieved we recommend to BOOK PORFITS in Numeric Power.