Dec 4, 2006

Moser Baer India Ltd.

BUY Recommendation - 40% Returns are achievable in long term

Moser Baer India Ltd (MBIL) is the 2nd largest producer of opticalmedia in the world. Incorporated in 1983, headquartered in New Delhi,it has a robust product range of CDs and DVDs. It is a cost leader anda supplier to all top 12 OEM producers in the world. The company hasinvested in next generation technologies like HD DVD and Blu-Ray Discand patented proprietary processes and technologies. Leveraging itscore strengths of optical business, the company has diversified intoPhoto Voltaic Industry.

Optical media shipments are expected to grow to 27 billion units by2008 from 17 billion units in 2005. MBIL is well positioned to capturethis growth. The company hopes to increase its market share to 20% fromthe present 17%. MBIL is a cost leader in existing formats like CDR /RW and DVD / RW. India is a large captive market and is experiencingfastest growth in the world in this segment.

At CMP of Rs 263, the stock trades at9x our estimated FY08 earnings of Rs 30 per share. We recommend longterm investors to BUY the stock with a target of Rs 370 (12x FY08Eearnings) in 12 to 15 months.

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