Asit C. Mehta research has maintained ‘Buy’ rating on Welspun Guj Stahl Rohren Ltd with a long term target of Rs 500.

According to Mr. Mehta, investors can purchase the stock on declines with a strict stop loss of Rs 355.

Today, the company’s shares opened at Rs 376, as against its last closure at Rs 373.25 on Friday (June 13), on the Bombay Stock Exchange (BSE). Current EPS and P/E ratio stood at 19.77 and 18.89 respectively. The share price has seen a 52-week high of Rs 537.70 and a low of Rs 190.05 on BSE.

The stock will achieve the target price as the company has aggressive growth plans and strong operating capabilities.

For the quarter ended March 2008, Welspun-Gujarat Stahl Rohren disclosed a phenomenal increase in standalone net profit but below the analysts’ anticipation.

During the quarter, the profit of the company surged 2.46 times to Rs 1,022 million from Rs 415 million in the same quarter, last year. The analysts` polled by Bloomberg had estimated earnings of Rs 1,229 million.

The company posted earnings of Rs 5.95 a share during the quarter, registering 95.08% growth over prior year period. The analysts` had predicted earnings of Rs 6.9 a share during the quarter. Net sales for the quarter zoomed 68.59% over previous year period to Rs 12,275 million, while the analysts` had estimated net sales at Rs 13,171 million. Total income for the quarter jumped 69.37% to Rs 12,383 million compared with the prior year period.

The board of directors has recommended dividend of 30%, or Rs 1.50 a share of face value of Rs 5 each.
 
Welspun Gujarat Stahl Rohren (WGSRL) is setting up a new 0.3 million ton per annum (mtpa) facility in the US.

It is also increasing its LSAW (longitude submerged arc welding) pipe capacity by 0.3 mtpa at its SEZ in Gujarat. Besides this, Welspun is expanding the capacity and de-bottlenecking of HSAW (helically submerged arc welded) pipes at its existing facility in Gujarat`s Anjar.