We reiterate BUY with a higher TP of Rs 1,654, valuing it at 10x Sep'21E consol EBITDA (in-line its 5-yr mean multiple). We like the co for its increased presence in the robust north market (grey biz) and for its steady growth in the white/putty segment. Its balance sheet remains under control (net Debt/EBITDA at ~2x in FY21-22), despite its large capacity increase across both grey cement (+40% to 14.7mn MT) and putty (+33% to 1.2 mn MT) by FY21E. We reiterate BUY on JK Cement (JKCE) with a TP of Rs 1,654 (10x its consol Sep21E EBITDA: EV/MT of USD 120).
Whilst 3QFY20 Rev was inline interest cost resulted in 14% APAT miss. Tepid order inflows and slowing growth in T&D and Railways segment on high base will result in sub 10% FY21E Rev Growth. Tailwinds like consolidated debt free status by FY21E will cushion any further de-rating. We maintain BUY. EPS cut factors in slower than expected order intake and muted ordering environment. Key risks (1) Delays in capex recovery, (2) Slowdown in government infrastructure spend, (3) Delay in Road BOTs monetization and (3) NWC deterioration. We maintain BUY on Kalpataru Power Transmission Ltd. (KPTL) with reduced SoTP of Rs 644/sh (core 15x FY21EPS). The Company is expected to achieve 18-20% revenue growth during FY20E. We have cut FY20/21E EPS by 0.7/4.1% to factor in tepid inflows. Tailwinds like significant BS deleveraging by FY21/22E will lead to further re-rating.
Maintain NEUTRAL as (1) Competition remains intense, with several SUV models displayed at the auto expo (2) Post BSVI, price hikes on diesel SUVs will impact profitability in the near term (3) The expected revival in tractor demand will partially offset the above. We advise investors to turn constructive on the stock after further clarity emerges on BSVI/favorable market responses to new launches. M&M;+MVMLs PAT at Rs 9.8bn was below estimates due to higher depreciation/tax rates. Demand outlook remains mixed. While SUV sales are likely to be impacted due to BSVI related price hikes, tractor demand will hold up on the back of good monsoons. The subsidiaries remain an overhang on the financial performance. We reiterate NEUTRAL with a Dec-21 SOTP of Rs 570.
We reiterate BUY as (1) With the DFC Phase-I expected to be commissioned shortly, we expect volume growth in mid-teens over FY21/22E (2) Margins have been resilient amidst a weak macro and (3) Privatization initiatives will improve valuations in the medium term. Key risk: A delayed recovery in demand. While CONCOR reported weak revenues (-8% YoY), operating margins sustained at a healthy 24.3% (-20 bps QoQ). The operator is preparing for the first phase of DFC, which is expected to start by Jun-20 and has started receiving DFC compliant wagons. We reiterate that it will be a key beneficiary of the DFC. We revise earnings downwards and maintain BUY with a revised TP of Rs 635 (at 24x Dec-21 EPS, 5% premium to its long term average trading multiple).
Cloud revenue witnessed growth after two quarters of slowdown. Cloud was supported by nine go-lives, ramp-up of cloud deals and higher implementation revenue from existing clients. Partnership with Capgemini, IBM and Microsoft (Azure) is promising, but not yielding results in terms of large deal wins. Growth in cloud subscription and recurring revenue will lead to margin expansion. We expect revenue CAGR of 10% over FY19-22E with cloud CAGR of 21%. We maintain positive stance on Majesco based on (1) Rising adoption of third-party software by insurers, (2) Solid partnerships, (3) Continued deal wins, and (4) Cloud traction. Risk includes prolonged sales cycle and deterioration in US/Europe macros. We maintain BUY on Majesco based strong recovery in revenue and margin in 3QFY20. Revenue growth was led by cloud traction, nine go-lives and deal ramp-up. EBIT margin expansion was healthy, supported by higher margin cloud subscription revenue. The order backlog is robust and cloud deal wins remains healthy. We increase FY21/22E USD revenue est. by 1.4/1.2% to factor in cloud recovery. Our TP of Rs 663 implies EV/rev multiple of 2.0x on Dec FY21 revenue.
Volumes are expected to boost in FY21/22E as (1) Benign LNG prices will ensure high LNG imports, in turn allowing full utilisation at Dahej on its expanded capacity, and (2) Completion of Kochi-Mangalore pipeline by March-20 will subsequently raise utilisation at Kochi. Core EBITDA margin of ~81% (revenue ex-RMC), in turn makes certain that OCF remains high Rs 86.94bn over FY21-22E. Also, in the absence of big capex plans, PLNG can generate FCF for over Rs 79.44bn. The FCF yield is ~6.9% and cash comprises 11.5% of market cap. Furthermore, rising competition from new LNG terminals is unlikely to have structural impact on pricing or volume growth of PLNG as (1) 76.4% of its total capacity is tied up with long term contract and (2) Being the lowest cost re-gasifier. It is searching for growth opportunities in overseas markets and after its stumble at Kochi, we believe PLNG will allocate capital more prudently in future. Stock is currently trading at 12.3x FY21E EPS and 7.1x FY21E EV/EBITDA. Given the rising return ratios and strengthening balance sheet, we ascribe a multiple of 17x Dec-21 EPS to arrive at a TP of Rs 397 (consensus Rs 327). We maintain BUY on PLNG though the 3Q volumes were below our est. Expected ramp-up at both terminals, predictable earnings from tied-up volumes and robust gas demand driven by low LNG prices keep our faith intact.
DBL has a strong execution engine which was impacted due to financial constraints owing to high equity outlay on HAM projects. This has been sorted out with Shrem and Cube Highways deal and likely closure of residual 7HAM projects monetization by 1QFY21. We believe that non roads share in the order book will de-risk growth concerns. Balance sheet healing augurs well for multiple re-rating. DBL is in talks with credit rating agencies for a possible rating review and has indicated 2QFY21E timeline for a possible outcome. We have cut down FY20/21E EPS estimates by 21.7/6.2% to factor in rev cut, high interest expense and taxes. We maintain BUY. Key risks (1) Further debt build-up; (2) Deterioration in NWC days and (3) Delay in balance 7 HAM monetization. We maintain BUY on DBL, with a reduced TP of Rs 681/sh (vs. Rs 717/sh earlier). We retain our target EPC multiple at 12x FY21E EPS to factor a marginal cut in FY20 revenue estimates. We have revised our FY20/21 EPS estimates lower by 21.7/6.2% respectively.
Despite the continued struggle to grow revenues in FY20, market share gains were unprecedented. It reflects BRIT's strong execution capabilities in the challenging phase. Although new product launches will be slow in the near term, we believe BRIT will bounce back in 2HFY21. BRIT can become a total snacking company as it has all the right ingredients i.e. brand strength, deep distribution, superior management execution and operating scale. Besides, we expect BRIT to continue gaining share in biscuits led by premiumisation and distribution expansion in Hindi belt. BRIT's 3Q performance was soft and revenue grew at slow pace of 4% (11% 3QFY19, 6% 2QFY20) vs. expectation of 7%. Weak rural demand continues to impact BRIT and 9M revenue growth was at 5%. However, market share gains were significant and unprecedented. Considering weak offtake, BRIT is focusing on strengthening the core i.e. (1) Higher focus on distribution reach, (2) Efficient supply chain to improve ROI for trade partners and (3) Targeted product campaigns. Co is consolidating new launches and concentrating efforts on depth of distribution. Steep inflation has been well managed by RM hedges and reduction in wastages. GM was down by mere 44bps. While, cost efficiencies and control on overheads (flat ASP) has improved EBITDA margin by 94bps. EBITDA growth of 11% was healthy. We cut estimates by 3% to factor slower recovery. We value BRIT at 45x P/E on Dec-21E EPS, arriving at a TP of Rs 3,551. Maintain BUY.
We remain constructive on GAIL as the risk/reward is favorable. India will derive higher benefit from the low LNG prices as the domestic natural gas ecosystem (CGD network, RLNG terminals, pipelines, revamp of fertiliser plants) develops. New US liquefaction terminals will boost RLNG exports and also keep Henry Hub (HH) prices subdued, enabling GAIL to swap cargoes. Thus, US LNG is not a concern. Maintain BUY. We maintain BUY on GAIL following a performance in-line with our PAT estimates in 3QFY20. Our target price is Rs 190/sh (6.0x Dec-21E EV/e for the stable Gas and LPG transmission business, 5.0x EV/e for the volatile gas marketing business, 6.5x EV/e for the cyclical petchem and LPG/LHC business, Rs 42 for investments and Rs 11 for CWIP) versus the consensus TP of Rs 168.
We like MGL since we do not foresee any significant regulatory adversity in its CGD business either through a change in gas allocation or capping returns. Its loyal customer base of CNG and commercial establishments (who together comprised 79% of Q3's sales mix), that are less price sensitive than industrial customers enable it to maintain per unit margins higher than peers. We see the risk/reward as favorable. Weaker operational metrics in terms of volume growth, feeble earnings growth and lower return ratios compel us to value MGL at 19x Dec-21E EPS vs 25/20x for IGL/GGL. MGLs Q3 EBITDA/PAT was above our estimates owing to better per unit margins. We maintain our BUY despite muted volume growth given its remarkable pricing power (hence, better spreads) and inexpensive valuations (15.6/15.3x FY21/22E PER) versus its peers (IGL 27.8/24.6x and GGL 24.5/21.3x). Our TP is Rs 1,475 (19x Dec-21 EPS) vs the consensus TP of Rs 1,165.
