SIL 1QFY20 start is weak on back of muted public/private capex. EBIDTA margin expansion was a positive surprise. Growth headwinds remain with limited visibility on Infrastructure ordering. Tight liquidity environment makes it further challenging to maintain NWC. Whilst ex GP (highly cyclical), less cyclical segments like Digital Industries & Mobility continue to see traction, large ordering is still awaited. While Mobility business sale was earlier put on hold we await clarity on highest revenue contributing segment-Power & Gas. Exports segment is also stagnant owing to weak global demand. We maintain NEU. Key risks (1) Delays in Government capex recovery, (2) Slowdown in private investments, (3) INR depreciation, and (4) Any adverse corporate action. Slowdown in capex and delayed customer off-take has resulted in a muted 1QFY20 Rev performance. SIL delivered Rev/EBIDTA/APAT beat/(miss) of (12)/3/(4)%. Our FY20/21E EPS is unchanged. Maintain NEU on Siemens India Ltd. (SIL) with a TP of Rs 1,463/sh.
JMC delivered robust 9MFY20 standalone Rev/APAT growth of 19.8/21.4% driven by 51% YoY growth in Infra segment. JMC is on track to deliver 15-20% growth in FY20. Slow order intake and weak real estate demand may impact B&F order book as clients will delay/defer projects. This shall cloud FY21E growth to sub 10%. Besides, Rs 900mn FY20 BOT loss funding/debt servicing is a dampener. Likely restructuring in two BOT assets during 4QFY20 or early 1QFY21 is a positive development and will reduce the equity infusion by the company towards loss funding and debt repayment by Rs 400mn/annum. Order book accretion of Rs 33.6bn YTDFY20E is muted, largely driven by B&F segment. We expect JMC to clock 13.1% revenue CAGR over FY19-21E. We will closely monitor the progress on BOT assets monetization and performance in 4QFY20. Key risks (1) Delay in monetization/resolution of BOT assets (2) Leverage. We maintain BUY on JMC, with a TP of Rs 162/sh (vs Rs 175/sh earlier). During 3QFY20 JMC delivered Rev/EBIDTA/APAT miss of 6/2/5% vs our estimates. We continue to value EPC business at 15x Mar-21 EPS. We have reduced our EPS estimates for FY20E/21E by 3.5/8% respectively.
After 3 quarters of muted Rs 4bn revenue runrate, CIL is returning back to growth path. With Govt order book (49% in mix) moving into execution from 4QFY20, CIL will start delivering strong execution. EBIDTA margin expansion of 100-150bps may play out as number of sites is coming down and average order value is going up. Gross debt is stable at Rs 2.8bn though CIL needs to bring down unbilled revenue. We Maintain BUY. Key risks (1) Slowdown in real estate (2) Delay in debtors recovery & (3) Slowdown in Government Capex. Capacite Infraprojects Ltd (CIL) delivered Rev/EBIDTA/PAT beat of (1.2)/9.8/8% respectively. Despite this, headlines numbers remain weak, resulting in 15/3/5% cut to our FY20E Rev/EBIDTA/APAT estimate. We believe 3QFY20 execution has bottomed and recovery is expected from 4QFY20. We maintain BUY on CIL with an increased TP of Rs 360/sh (12.8x FY21E EPS).
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.
