"FAIR VALUE" OF "CRESECT STEEL" "CSAP" RS. 162

"FAIR VALUE" OF "CRESECT STEEL" "CSAP" RS. 162

Current Price: Rs. 45.98

CSAP emerges as the golden bird among the small cap scrips trading at KSE. Crescent Steel is currently trading atCY09E P/Ex of mere 1.9x (sector CY09Ex: 7x). The scrip currently offers a massive TSR of 72% (including 8%dividend yield) to the intrinsic value of Rs 162/share. Sales are expected to surge by a 3-year CAGR of 27%,based on an expected increase in steel notional capacity & increased product price. This coupled with strong otherincome in the form of dividends would support the bottom line to grow at 3-year CAGR of 35%. Major risks to ourvaluation include slump in consumers’ purchasing power & increase in discount rate. We suggest investors toAccumulate at current market price of Rs 45.98/share.