Top takeaways from Q1FY17 : Lower than estimates due to impact of one?time cost and increase in depreciation.MTO volumes grew and the business maintained margins. However, lower shipping freight rates affected revenue negatively.CFS business outperformed the industry in terms of volume growth.Project business disappointed on revenue and margin with reduction in asset base and dry?docking of one ship.Acquisition of controlling stake in CCI Integrated Logistics to strengthen contract logistics and ecommerce.

Valuation: At its CMP, the stock trades at 13x our FY18 expected earnings of Rs 14.1, 1.8x FY18 P/BV, and 7.5x EV/EBITDA. We have cut our FY17/18 earnings by 9%/14%, considering weakness in freight rates in MTO and lower?than?expected growth in projects. The stock has traded at a significant discount of ~35% to other players while it is doing relatively better than other logistics players – with good volume growth; we expect this valuation discount to narrow to ~15%. We have revised our target valuations to 15x FY18 EPS (from 12x earlier) to arrive at a new target price of Rs 215 (Rs 200 earlier).