CMP: Rs 148
Nomura continues to maintain ‘Buy’ rating on Tube Investment of India due to the strong competitive position of its businesses, good return ratios, high quality of management and attractive valuation. While the growth may slow down in FY12E as compare to that in FY11, it is still likely to be upwards of 15% as per current indicators and estimates. The company has been able to pass on the increase in raw materials prices and is likely to maintain margins at least in the next one-two quarters. One year forward P/E multiple of 13.5%x on a standalone business is justified as it is a high quality and high ROCE business where the company has dominant market share. Nomura has not assigned any value to general insurance business, in which the company holds a 74% stake and held a market share of 2.3%in FY10.