Friday, December 3, 2010

Valuepick/ Investment Idea : Stylam Industries : Overview - 1/2






Stylam Industries Limited (Formerly Golden Laminates Limited) is a public limited company listed on Bombay stock exchange of India started in 1991 by Late Sh. N.R. Aggarwal.The overall supervision of the Company is being looked after by Mr. Jagdish Gupta (Managing Director). Mr. Satish Gupta (Executive Director) of the company is looking after the production and marketing functions of the company. All the directors of the company are well experienced in this line and the team has experienced professionals from various fields to look after the day to day production activities and quality control.

Unnoticed by the investor community, Stylam Industries Limited (formerly known as Golden Laminates Ltd.) is charting a phenomenal growth pattern.

The Company, initially engaged in the manufacture of Luxury grade decorative laminated sheets for both home and industry use, has now started manufacturing industrial as well as advanced grade laminates i.e. Postforming and Antistatic laminates under the brand name STYLAM.

Image Gallery

The present installed capacity of Stylam Industries Limited is more than 3.5 million sheets of laminates. Stylam Industries Limited manufactures laminates in the size of 1220mm x 2440mm, 1225mm x 2500mm, 1300 x 2800mm, 1300mm x 3050mm in thicknesses ranging from 0.4 mm to 20.0 mm in different finishes such as gloss, matt, suede & texture etc. in more than 600 designs under the brand name “STYLAM”

Stylam Industries Limited has imported moulds of various finishes from France and Germany. The back sanding of the laminates is done by ITALIAN IMEAS Machine, one of the best manufacturers of sanding machines in the world.

The dedication to quality has enabled the organization to earn ISO 9001 certification. Stylam Industries Limited being first in India and among very few in the world who has been awarded with the CE certification for its compact laminates.

Exports
are already being done in more than 60 countries in the Asia, Africa, Latin & North America, Middle East and 19 countries in Europe, while exclusive supply contracts with foreign manufacturers takes care of the imports.

Marketing
Stylam has an experienced marketing team at the helm of affairs and a team of qualified professionals overseeing the day to day activities.

Plant
The Company has an ultra modern plant at Panchkula near, Chandigarh, in North India. Quality being at the core of operations (latest sophisticated moulds of various finishes have been imported from France & Germany), Stylam Industries Limited has been certified an ISO 9001:2000 Company, awarded with CE Marking For its Compact laminates and also been recognized as Export House by Government of India.

PRODUCTS


Stylam Industries Limited is manufacturing High Pressure Laminates designed for both horizontal and vertical applications where appearance, durability, resistance to stains and heat upto 275°F (135°C) is required. Being substitute to wood, these products contribute to environment preservations as well as offer a more practical alternative for decor and electrical fittings etc. The products being manufactured satisfy the specifications as prescribed by EN-438, NEMA, ISI and B.S. There are more than six hundred designs in plain, wood grains and metallic shades to choose from.




Stylam Decorative Laminates are available in wide range of colours and sizes catering to decorative applications.

COMPACT INDUSTRIAL LAMINATES


STYLAM Compact Laminates are formulated with special thermosetting resins is a heavy duty, high pressure and load bearing capacity laminate having special properties to withstand atmospheric conditions. This commitment to quality had enabled the organisation to be awarded with CE Certification for the Compact Laminates for Interior applications. Recently, the organisation has also started manufacturing Compact Laminates for External applications by using Special UV protection film imported from Germany.



Stylam fire retardant laminates are manufactured by special formulation of synthetic resin having special fire retardant additives which enables them to withstand flame and smoke conditions as the formula ensures high resistance to the flame propagation. These Laminates ensures immediate full extinguish as soon as the flame source is removed.

Being first in India, Stylam Fire Retardant laminates have been tested for the “Reaction to fire behaviour according to DIN EN ISO 11925-2 and have attained Classification-B as per DIN EN 13501-1.

PHENOLIC BASE DRILL ENTRY SHEET


Unique, Flat Backup Material, Stylam Phenolic Faced Drill Entry and Backup Laminate is manufactured from special resin formulation ensures clean drill hole and minimum burr during PCB drilling.


SEP4 and SEP5



Stylam offers the user value + performance. A unique flat, hard entry material, the SEP4 and SEP5 is manufactured from fully cured phenolic resin and kraft paper. Our proprietory formulation, state-of-the-art production facilities under stringent quality control ensures a backup material in strict conformance with international standards. This ensures customers enjoy trouble free product and performance with superior finish.

Special features:

* Minimize burring SEP4 and SEP5 provides flat, hard surface for maximum support to minimize burring.
* Increase hole quality SEP4 and SEP5 specially formulated resin will not contaminate the hole wall.
* Return on investment SEP4 and SEP5 used in tandem with STYLAM backup materials provide the most effective conbination to reduce the need for the expensive deburring and hole cleaning procedure.
* Good for flex and rigid flex circuits and can also used for entry for the routing process.



PHENOLIC BASE DRILL BACKUP BOARDS

SBP15 and SBP20



Stylam offers the user value + performance. A unique flat, hard entry material, the SBP15 and SBP20 is manufactured from fully cured phenolic resin and kraft paper. Our proprietory formulation, state-of-the-art production facilities under stringent quality control ensures a backup material in strict conformance with international standards. This ensures customers enjoy trouble free product and performance with superior finish.

Special features:

* Minimize burring SBP15 and SBP20 provides flat, hard surface for maximum support to minimize burring.
* Increase hole quality SBP15 and SBP20 specially formulated resin will not contaminate the hole wall.
* Return on investment SBP15 and SBP20 used in tandem with STYLAM backup materials provide the most effective conbination to reduce the need for the expensive deburring and hole cleaning procedure.
* Good for flex and rigid flex circuits.


Unique, Flat Backup Material, Stylam Melamine Faced Drill Entry and Backup Laminate is manufactured from special resin formulation ensures clean drill hole and minimum burr during PCB drilling.



MELAMINE BASE DRILL ENTRY SHEET


SEM4 and SEM5



Stylam offers the user value + performance. A unique flat, hard entry material, the SEM4 and SEM5 is manufactured from fully cured phenolic resin and kraft paper. Our proprietory formulation, state-of-the-art production facilities under stringent quality control ensures a backup material in strict conformance with international standards. This ensures customers enjoy trouble free product and performance with superior finish.

Special features:

* Minimize burring SEM4 and SEM5 provides flat, hard surface for maximum support to minimize burring.
* Increase hole quality SEM4 and SEM5 specially formulated resin will not contaminate the hole wall.
* Return on investment SEM4 and SEM5 used in tandem with STYLAM backup materials provide the most effective conbination to reduce the need for the expensive deburring and hole cleaning procedure.
* Good for flex and rigid flex circuits and can also used for entry for the routing process.


MELAMINE BASE DRILL BACKUP BOARDS


SBM15 and SBM20



Stylam offers the user value + performance. A unique flat, hard entry material, the SBM15 and SBM20 is manufactured from fully cured phenolic resin and kraft paper. Our proprietory formulation, state-of-the-art production facilities under stringent quality control ensures a backup material in strict conformance with international standards. This ensures customers enjoy trouble free product and performance with superior finish.

Special features:

* Minimize burring SBM15 and SBM20 provides flat, hard surface for maximum support to minimize burring.
* Increase hole quality SBM15 and SBM20 specially formulated resin will not contaminate the hole wall.
* Return on investment SBM15 and SBM20 used in tandem with STYLAM backup materials provide the most effective conbination to reduce the need for the expensive deburring and hole cleaning procedure.
* Good for flex and rigid flex circuits.

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FABRIC BASED LAMINATES ...SEE APPLICATIONS



These industrial laminated boards are made from layers of woven cotton fabric using specially formulated thermo-setting synthetic resin. Different grades of fabric boards have been prepared depending upon the coarseness of cloth fabric and resultant electrical properties.



Grade Appearance Features and Applications
F-1 Brown
Coarse weave fabric reinforced laminate with good impact & mechanical strength and adequate machinability. Applications: Heavy duty gears, Pulleys, Working bench tops, Rolling mill bearings and Pilling dolly etc.
F-2 Brown
Medium weave fabric reinforced laminate with good moisture resistance, mechanical strength and machinability. Applications: Shuttles, Gears, Pulleys, Spindles, Machine tool parts, Automobile couplings, Friction plates etc.
F-3 Brown
Very fine weave fabric reinforced laminate with fine machining properties and good moisture resistance.


POST FORMING LAMINATES: USED IN FURNITURE INDUSTRY


In today's world, moulded furniture is a passion and style for comfort and STYLAM post forming laminates are must for these furnishers or furnitures. These are used in various horizontal and vertical applications where rounded or formed edges are required. They give an aesthetically beautiful finish to the furniture as cut edges or the base like wood or plywood are not visible.


CABINET LINERS


Stylam Cabinet Liner Laminates are designed for use on the backside of substrates like plywood. The primary applications of these Cabinet Liner products include contract and residential furniture, wall panels, countertops, and cabinetry. These Cabinet Liner Laminates are designed to provide attractive lining and facing surfacing for cabinetry interiors such as shelves, drawers and cabinet doors and walls.

They are solely intended for application to the unexposed backs of pieces faced with High Pressure Decorative Laminate and not for use as a structural material or to be mechanically fastened. They provide the fabricated piece with balance and protection from the effects of humidity in their normal use.

Though these Cabinet Liner Laminates are available in various colours and thicknesses, but typically cabinet liner backer laminates should be about the same thickness as the thickness specified for the Stylam decorative laminates used in the application.

Product Composition

Stylam Cabinet Liner Laminates are composed of kraft paper core sheets impregnated with phenolic resin. These sheets are then bonded at pressures greater than 1000 lbs. per square inch (70 kg/cm 2) at temperatures approaching 300° F (150° C). Finished sheets are trimmed and the back sanded to facilitate bonding.



STYLAM Paper Based Industrial (Bakelite) Boards are manufactured by using Kraft paper as reinforcement with specially formulated Phenolic resin as bonding media. Stylam Unclad industrial laminates are used for wide-ranging electronic, mechanical and electrical applications as tabulated below.


PAPER BASED INDUSTRIAL LAMINATES


Grade Appearance Features and Applications
P-1

Brown


Very good mechanical and adequate electrical properties. Satisfies low tension and low humidity requirements. Applications: Battery Eliminators, Transformers and Choke Bobbins, Tube Light Ends and Chokes, Control Panels, condenser Mountings, Drill Back up and Entry.
P-2

Brown


Combines good mechanical and electrical properties. Conventionally used in electrical applications under extreme conditions of humidity. Applications: Transformer Covers, CB Handles and Side Frames, Distribution Boards, Fuse Holder Bases etc.
P-3

Brown


Good mechanical and excellent electrical properties with low water absorption. Available with special synthetic resin surface for high tracking resistance. Applications: Power Electronic Transformers and Choke Bobbins, Relay Spacers, HV Transformers, Tap Changers, Grid Covers, Selector Bank Insulation.

METAL FACED DECORATIVE LAMINATES:


Stylam Metal Laminates feature brilliant metal colors and patterns on thick Aluminium foil imported from Europe laminated to a phenolic core combined to exhibit the look of real metal with the practicality of high pressure laminate (HPL). Metal sheet is impregnated with a polyester coated aluminium foil surface combined with phenolic-treated kraft paper that is fused together at high pressure and temperature as applicable in case of High Pressure Laminates. The sheet back is sanded to maintain a uniform thickness and facilitate bonding.

Metal laminate is suitable for interior light duty horizontal or vertical applications such as furniture, exhibits, accents, etc., where the look and design of metal are required.



PRE LAMINATED PARTICLE BOARDS
Stylam Pre-laminates are prepared by laminating the design patterns impregnated on both surfaces with specially formulated synthetic resins on imported M.D.F. panels under the influence of heat and pressure.

These pre-laminated particle boards find extensive interior applications in making partitions in modern Office Interiors, Cubicles, Computer Table, Telephone Table, TV Trolley, Shop Furniture, Wall Partitions, Indoor Sports items like Carrom, Table Tennis etc.

Key Features:

* Available in a wide range of shades/patterns in wood grain and in thicknesses from 8 mm to 25 mm
* Uniform density properties ensure resemblance to natural wood and freedom from knots and twists
* Available in double-sided laminations for Smooth surface appearance that does not require finishing
* High internal bond and Strong load bearing panel
* High modulus of rupture
* High screw holding strength
* Does not warp, bend or change even when exposed to humid conditions
* Can be moulded & routed to give any shape
* Edges do not split as it has a single solid core




Finishes: Glossy, Matt, Suede, Texture, Ash, Fine Line, Impression, Pearl, Emboss

INNOVATION



Our state of the art manufacturing unit, equipped with modern equipments, plays the part of shaping imagination into creative masterpieces. the company started with the manufacture of HPL grade laminates sheets for both decorative and industrial use, and has now started manufacturing advanced grace laminates i.e. Post-Forming and Antistatic laminates under the brand name "STYLAM".

A comprehensive range of design and patterns, with back sanding by ITALIAN IMEAS Machine, makes STYLAM the first choice of architects, interior decorators and designers.

'STYLAM' laminates pass through stringent quality control checks to ensure quality par excellence. Which is why, STYLAM laminates are highly resistant to daily wear and tear.





This dedication to quality has enabled the organisation to earn ISO 9001:2000 certification. The organisation has recently been awarded CE Certification for its Compact Laminates range being first in India and among very few in the world. More than 80% of the products are being exported to over 60 countries around the world, along with exports to 20 countries in Europe providing testimony for our commitment to quality.



MISSION AND VISION


To provide utmost satisfaction to the consumer through best quality and customer care
To continuously upgrade the product through innovations and convergence of new technology and to produce the best quality at the lowest cost
To respect the dignity of all employees and together become instrumental in the development of the country while protecting the environment
To utilize the surplus for the welfare of employees and the society at large
QUALITY POLICY


We are committed to manufacture and supply quality decorative & industrial laminates as well as allied products confirming to requirements and expectations of the customers for their satisfaction. To achieve this, the company has set the following objectives.

* To install, implement & maintain a quality management system in line with the requirement of ISO 9001:2000.

* To continuously improve productivity and product quality through upgradation, automation, training and employee involvement.

* To motivate employees by creating better work environment and team spirit.



AWARDS AND CERTIFICATIONS



Stylam Industries Limited is exporting on a regular basis to over 60 countries worldover and has won several export awards consistently. However our biggest award is support & satisfaction of valued and satisfied customers which include many multinational companies and leading furniture manufacturers.

ISO 9001-2000 Certification:


Our dedication to quality and commitment to customer satisfaction has found testimony in the organisation being awarded ISO 9001-2000 certification for complete range of laminates manufactured.

CE Certification:


The organisation has been recently awarded CE Certification for its Compact laminates range by ITC Inc., Czech Republic and has fulfilled all requirements as applicable as per EN 438-7:2005. Stylam Industries Limited is the first laminate manufacturer in India and among very few in the world to be awarded this coveted certification.

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Energy Conservation Award:



Our commitment to conservation of valuable energy has enabled us to get Excellence In Energy Conservation Award (First Position in Haryana State in its category) in the year 2005 and 2009 from Renewable Energy Department, Haryana beating the competition from more renowned peer industrial houses.


ETB Certification:

The company has been awarded with ETB Certification for Compact Laminates in Germany.

Euro Class B Certification:

The company has also been awarded with Euro class B Certification (Spain) for manufacturing fire retardant Laminates.

Research & Development



The R & D department is continuously at work developing & adopting newer practices and creating richer range of designs matching international standards.


Technology

Golden laminate manufacturing plant is a 'state of the art' plant equipped with sophisticated & latest machinery. Right from raw material selection to a finished product testing, the entire process is carried out with utmost care & perfection, keeping human errors to the minimum. Thus stylam laminates are high strength, long lasting and beautiful, matched by none.

PACKING STANDARDS



All sheets are packed in strong waterproof plywood boxes/cases, well protected with polystyrene (thermocol) & plastic sheets. Quantity per box depends on the thickness and requirement.


COMPANY PHILOSOPHY.....


The ‘Q’ Edge


At Stylam Industries Limited care is taken to ensure only the finest product gets through to the customers. The manufacturing unit incorporates comprehensive testing at each stage. Ensuring flawless raw material standards are used every time. The quality control department compromises of one of the best in the country. The systems are developed based on research and stringent customer requirements. All units of Stylam Industries Limited follow stringent quality procedures with every order undergoing inspection by an in house experienced and professional audit team. Quality systems are strictly adhered to in the product processing departments and other finishing departments.





Timely deliveries are given utmost importance at Stylam Industries Limited and customer satisfaction is considered as the top priority. Professionally qualified people handle the entire product movement at different levels from stock to customers.

“Quality is the key factor to retain consumer and thereby benefit both company and the market”

The Human Angle

In today’s highly competitive world the most valuable resource of any company is its human resource – the knowledge pool of experience and expertise – Trained and motivated to meet any challenge. This resource, Retrained, deployed and rationalized, at all tiers of the organization translated new business opportunities into results for the company. Stylam Industries Limited has adopted high standards of transparency, Accountability, Professionalism and Social Responsiveness with improved and responsive customer focus, to maintain itself as a value driven group. With the outlook of the general business environment improving both domestically and internationally, the company is upbeat on the new opportunities in manufacturing. Building on the experience of the past , Stylam Industries Limited would continue scaling new heights; the future holds more with Stylam Industries Limited.

The Value of Solutions


With every converting opportunity comes the challenge of selecting the product that best fits your needs. At Stylam Industries Limited, our state of the art manufacturing equipment is designed with the flexibility to produce Short-Run specialty, as well as Long–Run/High-Volume products for repeat business. We proudly offer the widest range of Laminates for all kind of applications. So, the next time your application warrant one – of – a kind custom solution or an off – the – shelf product, remember that no company is better prepared to deliver the best possible solution for your requirement. That’s the value of solutions. That’s the value of Stylam Industries Limited.


PRODUCTION PROCESS

High Pressure Laminates (HPL) are manufactured from layers of cellulose fiber (usually Kraft paper) impregnated in specially formulated thermosetting phenolic resins and bonded with layer(s) of imported coloured design papers impregnated in thermosetting melamine resin through the combined action of heat (150°C) and high pressure of 7 Mpa (70 kg/cm 2). The process takes place in multi-daylight presses and consists of the poly-condensation of the thermosetting resins, which yields a non-porous, homogenous material with strong internal cohesion (density 1.35-1.40 gm/cm 3).

During the pressing process, metal plates impress a fine texture finish onto the laminate surface which, depending on the function and the desired scratch and wear resistance, ranges from high glossy to various textured finishes.

HPL is supplied as panels in a combination of sizes, thickness, décor colour and surface textures.

Apart from the various in-process quality checks, at the end of production cycle, the finished product is subjected to stringent testing and visual inspection to ensure that only products conforming to specifications is dispatched to the customers. At the packing & dispatch stage, customised packing is provided to the finished product in order to ensure proper protection of the product from dust, moisture and handling shocks. The use of packing type is customised to ensure easier unloading of crates or pallets from containers and their handling in warehouse.

Investment Idea : Value Pick : Stylam Industries

Investment Rationale :


Established Company with strong business, excellent demand for its products( demand outstrips the production of Stylam laminates) & good support and synergy from its parent group.

STYLAM AND ITS SISTER CONCERN, GOLDEN CHEM CELL TECH, HAVE BEEN IN THE laminates and allied BUSINESSes SINCE 1991



GOLDEN CHEM CELL TECH IS AN ESTABLISHED MANUFACTURER AND SUPPLIER OF INDUSTRIAL ADHESIVES USED WIDELY BY LAMINATES INDUSTRY.. STYLAM EARNS ADDITIONAL REVENUE FROM SALES OF SUCH ADHESIVES.

IMPLIES GOOD SYNERGY WITH SISTER CONCERN WHICH IS OF ADDED ADVANTAGE TO STYLAM AND CONTRIBUTES TO ITS TOPLINES AND BOTTOMLINES.

stylam is a QUALITY FOCUSSED manufacturer offering a huge variety of laminates and laminate products catering to a diverse range of industries and sectors. It is seen to be an INNOVATIVE, and customer focused manufacturer with a strong management at its helm having plenty of years experience in the laminates sector. among others, stylam is a niche laminates player, offering among others, fire proof laminates and materials, as well as some unique speciality forms of finsihed laminates that not many companies domestically have the knowhow or resources to manufacture.



80% PRODUCTS EXPORTED, FACING HEAVY DEMAND FOR ITS PRODUCTS DOMESTICALLY AS WELL AS ABROAD

DUE TO HEAVY DOMESTIC DEMAND, COMPANY IS GOING TO EXPAND ITS CAPACITY BY 40% THROUGH INTERNAL ACCRUALS AND TERM LOANS, IMPLYING THAT POST EXPANSION, ITS TOLINES , BOTTOMLINES AND EPS WOULD GROW AT A FAIR CLIP GOING FORWARD/





PROMOTERS HAVE BEEN INCREASING STAKE STEADILY FROM 2006 ONWARDS, FROM 48.34% TO 54.23% IN SEP 10.

BIRLA SUNLIFE MUTUAL FUND AND RELIGARE SECURITES WERE EARLIER HOLDING STAKE IN 2007,

COMPANY HAS BEEN POSTING CONSITENTLY GOOD EARNINGS ON ANNUAL, HALF YEARLY AND QAURTERLY BASIS, BUT STOCK PRICE HAS NOT REACTED TO THE CONSISTENT PERFORMANCE BEING PUT UP ON ALL FRONTS BY THE COMPANY. at present, GEPL COMMODITIES WAS HOLDING 1.84% STAKE, as per latest shareholding pattern filed with bse.However, just before the recent meltdown in the markets , GEPL had offloaded a large quantity.



Very good dividend yield adds deep value at current prices. Such high dividend yield stocks usually have lower  downsides.

post its strong performance in fy10, the management declared a 7.5% interim dividend, and final dividend of 7.5%, resulting in total dividend of 15% on FV10. At cmp, dividend yield comes to 5.12%








Attractive valuations
ON THE VALUATIONS FRONT, Q2FY11 EPS AT 1.87, FY10 EPS AT 4.10, H1 FY11 EPS AT 3.27,


ON FY11E EPS 6.54 , PRESENT PRICE DISCOUNTS THE FORWARD FY11 EPS BY 3.76X, which is quite low by any standards, for a niche player like stylam industries with a good dividend yield



ON A CONSERVATIVE ESTIMATE OF 8PE FOR THE INDUSTRY, WE ARRIVE AT A TARGET PRICE OF 46-51rs for FY11 End from a fundamental point of view.

post capacity expansion, the toplines and bottom lines could see a significant spurt, by atleast 40%, implying further upsides in the next FY.

At cmp of 24.55rs, the scrip has a dividend yield of 6.11% on 15% dividend for fv10, implying very good value at current levels.





ON THE CHARTS, STOCK HAD BEEN UNDER HEAVY BEARIsh PRESSURE,implying accumulation over a long period mixed with the stock price rising and then running out of steam on earlier stron rise and subsequent market ruomours and operators exiting.


Currently it SEEMS TO HAVE COMPLETED ITS EARLIER SUSTAINED CORRECTIONPHASE HAVING MADE AN INVERTED SAUCER PATTERN earlier , WITH earlier STRONG SUPPORT AT 27.5 RS , which was breached in this recent market correction, WITH THE RESULT THAT THE STOCK PRICE FELL FURTHER TO 20RS, AND HAS SINCE THEN , REBOUNCED SMARTLY. 
as a result, 27.5 level has become resistance level, which once crossed, will lead to targets of 42-46 in the short to medium term. as such, stylam industries is a good buy/hold for 2-9 months target of 42-46 rs. 

the stock price has closed on 27.4 for for the last 2 sessions with increased volumes seen, implying that it is close to a break out.

if the company keeps posting strong earnings for the next two quarters, one can expect good dividend from the management, as seen earlier in fy10
. value buy at current levels for a niche small cap company that is going strong on the business front , and seeing heavy demand for its products domestically as well as from abroad, where it presently is exporting to 60 countries. at present full capacity , the company is only able to supply 20cr rs worth of manufactured high quality laminates to the domestic market, and due to the heavy domestic demand seeen for its products, the company is undertaking a capacity expansion to increase its production by 40% from current levels, to supply to the domestic sector.


the management has initiated plans to develop the company’s land holding into an IT SEZ, which when commercially developed would add significantly to the toplines and bottomlines of the company, by means of rental income, generating further resources for the company to expand its business.


the valuations of this land under the company has not been taken into account in this analysis.


the present market cap of 17.92 cr provides and excellent entry level for long term value investment, from a 12-18month perspective.
Post capactiy expansion, assuming 40% growth in its bottomlines and PAT, the EPS for FY12E could be at 8.96 , which on a conservative PE of 8 , could lead to a FY12E price target of 71-72 rs.