Emkay has recommended an `Buy` on Arshiya International with target price of Rs 230 against current market price (CMP) Rs 187 on Feb. 01, 2010.

The broking house gives the following investment rationale:

Arshiya reported Q3FY10 results which were above our estimates with revenue growth of 17% to Rs 1.3 billion, driven by 13.5% growth in the logistics segment. EBITDA during the quarter grew by 24.6% to Rs 217 million. EBITDA margins grew by 99bps to 16.2%. PAT for the quarter grew by 301.2% to Rs 526 million.

During the quarter, Arshiya entered into an agreement to sell the marketing rights along with all existing customers and hosting infrastructure of their software Cyberlog to Aurion Pro for Rs 398 million. This amount has been realized as other income in this quarter.

On the rail transport operations front, Arshiya currently has 6 rakes in operation and plans to add 3-5 more till the end of Q4FY10.

We expect the company to report revenue of Rs 5.8 billion in FY10 and Rs 7.7 billion in FY11. We expect net profit of Rs 571 million in FY10E and Rs 1.1 billion in FY11E as we expect the Mumbai & Delhi FTWZs, phase 1 to generate revenue in these fiscal years.

The stock currently trades at 19.5x FY10E and 10x FY11E earnings. We maintain our Buy rating on the stock with target price of Rs 230 (based on 12x FY11 earnings).