With working capital expansion owing to rising inventory and the recent run up in the stock price, we downgrade Skipper to NEUTRAL with TP of Rs 253/share. Skippers sales grew 32/29% YoY/QoQ to Rs 5.2bn vs our expectation of 12% YoY growth, aided by a 28% YoY rise in Engineering revenues to Rs 4.6bn. A 250 bps rise in raw material cost impacted gross margins, which fell to 32.9% vs 35.4% YoY. Further, a 323bps rise in other expenses (at 14.8% of sales) led to EBITDAM fall of 573bps to 13.2% (in line with our estimates). Net profit fell 30% YoY to Rs 232mn, a result of higher depreciation (up 68% YoY to Rs 121mn), interest cost (up 21% YoY to Rs 200mn) and tax rate (at 36.4% vs 34%).