Kirloskar Ferrous (KFIL) delivered another subdued performance in Q1 due to continued pressure in gross margins and increased other expenses (due to nonrecurring items) negating strong volume growth. We remain positive on KFIL's prospects as it features i) increasing share of high-margin casting business which has spare capacity, ii) cost efficiencies from upcoming low-payback projects albeit slightly delayed, iii) an enviable track record of converting cash profits to cash flows (5Y/10Y AOCF/CP ratio of 1x/0.9x) and iv) strong balance sheet with low D/E of 0.1x. We expect strong earnings growth during FY18-20E driven by castings volume CAGR of 20%. Valuations remain undemanding with attractive cash flow yield of 14.5% &...