Edelweiss believes that the firm is a superior brand with strong distribution and pricing power.
Brokerage house Edelweiss has initiated coverage on Sheela Foam with a buy call and a target price of Rs 2,010. The firm sees an upside potential of 20 percent on the stock.
As a result, the stock soared around 3 percent on Tuesday morning. It touched an intraday high of Rs 1,725.00 and an intraday low of Rs 1,714.50.
Edelweiss believes that the firm is a superior brand with strong distribution and pricing power.
It sees broad-based growth, easing raw material prices and improving mix as positives for the stock.
Going forward, it sees revenue, EBITDA, and net profit to grow at a CAGR of 14, 30 and 35 percent, respectively over FY18-20.
Speaking on the stock, Edelweiss also said that Sheela Foam is currently trading at high valuations, but the earnings per share (EPS) is reflecting the opportunity size in the stock.
In the past one month, the stock has gained 13 percent, while in the past three days, it rose over 3 percent. At 10:07 hrs, Sheela Foam was quoting at Rs 1,720.00, up Rs 39.00, or 2.32 percent, on the BSE.
Disclaimer: The above report is compiled from information available on public platforms. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.