Nishat mills limited Still going strong

We reiterate our ‘Buy’ call on Nishat Mills Limited (NML) with a target price of Rs115. The stock is currently trading at FY13E and FY14F P/E of 6.4x and 6.0x, respectively.

We believe NML will close FY13E with earnings of Rs15.92/share, backed by higher margins (up 2ppts YoY) and healthy dividend income from its group companies.

 

Potential future triggers include (1) listing of Lalpir Power Ltd via offer for sale (likely to result in a gain of Rs0.17/share on NML bottom line) and (2) approval of GSP plus status for exports to EU.

Although the recent implementation of GST on retail textile made-up items and garments might result in initial dip in volumes at the domestic level, we believe the impact of GST will easily be passed on to end consumers.

Research Report

By: JS Research