Top takeaways from Q1FY17 : Recurring PAT (Rs 803mn, +50% yoy) was 42% above our estimate, led by margin expansion.Gross margin (86.2% vs. 56.9% yoy) surprised due to change in sales mix to the high? margin consultancy segment (79% of sales vs. 57% yoy). EIL achieved its FY17 order inflow guidance in 1Q itself (Rs 20.6bn, +318% yoy).

Valuation: Phillip Capital maintain their Buy rating as they believe that though the order inflows thesis may be priced in, there is further scope for re?rating on a turnaround in margins, which should benefit from operating leverage. We expect EIL’s core earnings (ex?other income) to see a 53% CAGR in FY16?18, aided by a 46% CAGR in EBITDA. We base our revised price target of Rs 280 (Rs 210 earlier) on 33x (30x earlier) FY18 core EPS of Rs 6.1 and add Rs 79/share of cash value.