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Hold Pokarna, target Rs 140: ICICI Direct

Pokarna is a smallcap company, operating in mining sector.

Updated: Jul 01, 2019, 01.19 PM IST
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The brokerage has set a one-year horizon for the stock to hit the target price.
ICICI Direct has given a hold recommendation on Pokarna with a target price of Rs 140.

Shares of Pokarna traded at Rs 143 around 12:55 pm on 1 July, 2019. The brokerage has set a one-year horizon for the stock to hit the target price.

At the current market price, the stock is trading at an attractive valuation of nearly 4.7 times FY19E earnings per share (EPS).

In its June 24, 2019 press release, the United States International Trade Commission (USITC) determined reasonable indication of material injury caused to the US market due to imports of quartz from India and Turkey.

The quartz division contributed nearly 68 per cent to overall revenue of the company worth Rs 462.2 crore in FY19.

It derives almost entire revenues from the US market. While the matter will be further investigated by the US Department of Commerce, the affirmation by the USITC is sentimentally a negative development for Pokarna and could remain a key overhang on the stock.

Even though valuations appear to be cheap, the USITC’s affirmation on the US market getting materially injured and threatened due to imports of quartz surface products from India and Turkey could lead to anti dumping duty being imposed on quartz surfaces imported from India though the management could challenge any negative finding.

"While we are currently awaiting clarity in terms of quantum of anti dumping duty on quartz, any development on this front could have a negative impact on Pokarna’s financial performance. Hence, we downgrade the stock to hold with a revised target price of Rs 140 per share (6 times FY20E EPS)," said the brokerage.

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