Stock analyst Sovid Gupta, Fairwealth Securities has maintained ‘Buy’ rating on Areva T&D stock to achieve a target of Rs 500.

According to Mr. Gupta, interested investors can buy the stock around Rs 292-254 with a stop loss of Rs 199.

The company’s stock on June 09 closed at Rs 484 as against last closure at Rs 346.85 on the Bombay Stock Exchange (BSE). Current EPS & P/E ratio of the stock stood at 9.35 and 37.10 respectively. The share price has seen a 52-week high of Rs 960 and a low of Rs 130 on BSE.

According to Mr. Gupta, the call is based on expectancy of strong growth in order book going forward, led by thrust in power segment particularly Nuclear power by the newly made UPA administration.

Mr. Gupta said that at trailing P/E ratio of 12.7 for 2012 and bottom-line development rate at 20%, PEG ratio of .6 shares is good for long term investors, who can hold the stock for around one year.

The company has also said that it anticipates doubling up its income by 2012.

There are expectations that company can grow at over 20% compounded rate up to XIIth five year plan while the country India has projected to more than double its total power capacity by adding up 160,000 MW by the next 8 years.

The company’s net sales surged by 67% Y-o-Y to Rs 845 crores. The main reason for the same was company’s accounting plan change for income recognition for long term contracts in Systems and Power Transformer business.

Operating profits of the company increased by 28% as cost of raw material grew substantially over last year (71% Y-o-Y).

On a yearly basis, the company recorded a top line growth of 23%, which was below than the analyst expectation; major reason for inferior growth was postponement in financial closure of many of the projects. Bottom line increase of 29% was lower owing to increased raw material costs for 2008 and changed product mix.

The company has 8 manufacturing plants for power transmission and distribution and other industrial equipment. It is a world leader in the energy business. It is globally the number one in the entire nuclear cycle and number three in the T&D business. The parent group holds a 72% stake in the India and aims to double revenue from Areva T&D India in the next three years.