Top takeaways from Q1FY17 : Dahej terminal operated at an all time peak of 130% capacity or 3.2mmt as 3rd party regas volumes rose 42% yoy and 89% qoq to 50.1tbtu aided by steady demand and Dabhol terminal going offline during monsoons. Long term/spot LNG volumes declined slightly due to seasonal factors and Dahej operating at maximum capacity. Our computed marketing margins on spot volumes jumped sharply from negative Rs 21/mmbtu in Q4FY16 to positive Rs 56/mmbtu in Q1 8 Kochi utilisation remained weak at 4.5% or 2.9tbtu with BPCL Kochi refinery being the only major customer though FACT fertiliser plant is upping off?take .Other income rose 43% yoy and 31% qoq to Rs 494mn.
Valuation: Phillip Capital raise FY17 EPS by 22% building in higher Dahej volume though FY18 remains unchanged, assuming 100% terminal utilisation and however change their long term DCF model by lowering WACC and net debt and building 1% terminal growth rate. Maintain Neutral with Rs 325 revised target price (Rs 275 earlier).
The Indian tyre industry has grown by 4% in FY1116 in terms of tonnage sold (to 1.7mn tonnesfrom1.4mntonnes).Withavolumecontributionof55%,theCVsegmentformsthe largestchunk,butithasbeensluggishwithafiveyearCAGRofjust2%;subduedeconomic activitynotonlymeantweakerOEMsalesbutalsolowermovementoftrucksleadingtolow wearandslowerreplacementdemand.Passengervehicletyreshaveseenstrongestdemand offtake with 8% CAGR, whereas twowheeler demand CAGR was 6%. The tyre industry shouldposta6%tonnageCAGRuntilFY21,withthePVsegmentpostingthehighestCAGR of8%,2Wat7%,andCVsegmenttheslowestat4%.Shifttowardsthepassengersegment...
Top takeaways from Q1FY17 : Inox Wind’s recurring PAT (Rs 103mn, ?85% yoy) was materially below our and consensus estimates as lower than expected execution led to a negative operating leverage coupled with high interest costs on account of increased working capital. In 1Q Inox focused on clearing the backlog of production of relatively lower ASP components such as blades and towers while going slow in producing nacelles in order to synchronise component supply going ahead. This led to lower revenues. In addition, due to lack of clarity on tariff in the state of Gujarat clients withheld commissioning, which has subsequently picked up as the state announced its multiyear tariff only in August.
Outlook and Valuation: Based on the weak 1Q performance we cut our FY17/18 earnings estimates by 25% and 19% respectively. We downgrade our rating on the stock to Neutral (from Buy) and cut our price target to Rs 200 (Rs 360 earlier). The company has disappointed investor expectations for the past three quarters on execution, margins and working capital. Consequently, the stock has de?rated and the price has declined 50% in the past 12 months. For the stock to re?rate we believe Inox will have to deliver on reducing its net working capital (53% of TTM sales in 1QFY17) to offset the negatives of slowing industry growth due to a policy cliff in FY18. Since ~50% of FY17 sales will be generated from Gujarat based sites, which now have improved visibility on tariffs, we believe that Inox has a fair chance to reduce its working capital and this refrains us from downgrading the stock to Sell.
On 26th April, 2016, media sources reported that an investigating committee formed by Bombay Municipal Commission (BMC) had recommended black-listing six companies for executing ‘shoddy work’ on the 35 road projects that they had inspected. The list included five private players (Mahavir Road Infra, Relcon Infra Projects, KR Infra Projects, RPS Infra Projects and RK Madani) – JKIL was the only listed player.
Outlook and Valuation: Over the last six months, JKumar’s stock has corrected by over 50%, bearing the brunt of the BMC black-listing and its potential impact on current and future orderbook. While on one hand, the current orderbook (at 6.3x book-to-sales) provides high revenue visibility, we see no clarity emerging in the next six months (till BMC elections in February 2017), on the “executable orderbook”. Chances of the imprisonment of the promoter/management of the company can also not be ruled out, at the current juncture. In view of the lack of clarity on order cancellations and its potential impact on the orderbook and earnings, we suspend our rating on the stock and put the stock “Under Review”. We will maintain passive coverage, keeping a keen eye on the developments and resume our coverage as soon as clarity emerges on the aforementioned issues.
31st, 2016. The tariff plans ranges from Rs 149/month for 0.3GB to Rs 4999/month for 75GB. All the plans will offer free unlimited voice call (local and STD) and also free roaming.Otherkeyhighlightsofthelaunchstrategyareasfollows: DatawillbechargedatRs50/GBvs.existingtariffofRs250/GB FromSeptember5,2016onwards,JIO'sbouquetofapps,allserviceswillbemade availabletoeveryoneabsolutelyfreetillDecember31,2016...
Zee has shown superior ad?revenue growth over the last five quarters; it was +29% in FY16 vs. our estimate of an industry growth rate of 15?16%. This outperformance mainly came from market share gains in the regional space and the launch of its second Hindi GEC channel. Despite softness in FMCG ad spends (the sector contributes 50?55% of total TV ad revenues), we believe there are enough drivers for Zee’s ad revenue growth rate to be higher than the industry’s, including: (1) market?share gains in the Tamil GEC space, (2) monetisation of Zee Anmol (Zee’s Hindi GEC FTA channel), and (3) launch of a new/movie channel in the regional space. We estimate Zee’s ad revenue CAGR at 19% in FY16?18.
Valuation: Driven by consistent outperformance in ad revenue, Zee’s 12?month forward PE multiples have rerated to 36x vs. a five?year average of 26x. We believe that the company will sustain premium valuation driven by – (1) industry?leading ad revenue growth, and (2) robust subscription revenue growth translating into an operating?margin expansion of 200bps over FY16?18. We maintain our BUY rating with an increased TP of Rs 590 (vs. the earlier TP of Rs 540), which is based on 35x FY18 EPS.
Barrage of analyst meets over the last six months The IT sector saw a barrage of analyst meets over the last six months. Five listed companies, including three from the top-4, conducted full-day interactive sessions addressing investor concerns and showcasing their capabilities, especially in the digital space. With the world moving to digital platforms a development which is already cannibalising their traditional revenue streams it was natural that the companies highlighted their capabilities in this new' domain. While the analyst meets were highly informative and insightful, there was...
Top takeaways from Q1FY17 :Recurring PAT (Rs 401mn vs. loss yoy) was inline with consensus but below our estimates. Earnings were aided by an unexpected trading profit (Rs 414mn) booked in the international power systems segment, implying a 44% margin for the business. The management expects this trading profit to taper through the year.
Valuation: They maintain our Neutral rating with an SOTP?based price target of Rs 86 (unchanged), as see structural headwinds for CRG’s domestic power segment because of lack of new technology for high?end grid products.Also believe that current valuations (19x FY18 PE) not only adequately price in the impending uptick in the industrial business, but also ascribe a value to the potential sale of its automation business.
Key highlights: A decent performance with JLR posting healthy margins despite currency hedgesworkingagainstit.WeseemarginimprovementmajorlyfromFY18astheimpactof currenthedgesstartsreducing.WecontinuetoseevolumesCAGRat13%inFY1718ledby new launches, strong developed market performance, and volume recovery in China. The recentsharpdepreciationinGBPboostsJLRscompetitiveness;andmarginimpactwillfade ashedgesturnfavourablemostlyfromFY18.WetweakourestimateswenowexpectJLR topost15.4%EBITDAmargininFY17(15%previously)asthecompanyreapsthebenefitsof...
Top takeaways from Q1FY17 : Strong 19% yoy growth in topline – was inline with our and consensus estimates. EBITDA margins at 13% (flat qoq) – along expectations. EBITDA at Rs 671mn (+12% yoy) – was bang inline with our estimate (Rs 670mn). Other income was boosted by Rs 140mn exceptional income on loan to subsidiary. PAT was boosted by higher other income and MAT credit – adjusted PAT was inline with estimates. Orderbook was Rs 51bn (2.4x book-to-sales); 3.1x including L1 of Rs 13.7bn. Standalone debt at Rs 150mn (down from Rs 3.5bn in FY15) on repayment using IPO cash proceeds. Cash reserves at Rs 1.3bn, making it net cash company (from leverage of 0.5x in March 2015). Debtor days reduced to 54 from 68 in March 2016. It expects these to be at 80-90 going forward. Net WC days decreased to 87 from 92 in March 2016 – expected to be 115-120 days going forward.
Valuation: Phillip Capital have made minor revision to FY17-18 estimates. They continue to value PNC using SoTP – EPC business at 15x FY18 P/E (inline with peers) and BOT at 1x P/BV. Also note that DCF value of PNC’s BOT portfolio is 20% higher than the book-value – hence providing further upside potential, over and above our price target. They maintain BUY rating with price target of Rs 140 (unchanged).
