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Kirloskar Ferrous Industries (KFIL) incorporated in 1991 is engaged in business of manufacturing pig iron and ferrous casting used in automobile and tractor industries. KFIL was promoted by Kirloskar Oil Engines Limited (KOEL) and Shivaji Works Limited (SWL) and in 2007, SWL was acquired by KOEL. Company caters to the requirement of high quality pig iron, Intricate thin walled grey iron castings to the Tractor, Auto, Engine and other related segments. Company has two...
in coal, oil and gas, commodity transportation and dredging sectors. Mercator Ltd's businesses include 1) Coal mining and Logistics - The Company operates its coal mines in Indonesia and Mozambique under the brand name Oorja...
consideration to the rising crude oil prices volume growth for MGL remains immense. Geographical expansionary opportunity for MGL also remains huge given its location in large areas of Thane and Raigad which happens to be an ideal mix of commercial, transportation and domestic fuel requirement. MGL has developed adequate barriers to entry by setting up an extensive infrastructure network, which may deter competition, particularly in CNG and domestic PNG segments. CNG volume...
Consolidated EBITDA grew 24% YoY to INR425m (our estimate: INR418m); EBITDA (ex-activation) declined materially to INR59m (in line), as Phase III digitization-led subscription uptick remained elusive, courtesy the pending court stay orders on DAS implementation. Subscription growth optically low, as SITINET moves to net billing in Kolkata: SITINET moved to net billing in Kolkata (and is likely to replicate this in Mumbai and Delhi). Consequently, subscription revenue and related distribution costs for the quarter were netted off. While reported subscription income grew 8% YoY to...
GST implementation may lead to a levy of a sin tax of 40% on cigarettes in addition to the prevailing excise duty structure. The sin tax will replace the state VAT which is currently at 26.5% on a blended basis as per our estimates. This hike is significant and it will have a significant impact on the cigarettes business volume and profit growth. While the impact is significant, we find ITC is preparing ground for GST implementation by taking calibrated price hikes and steadily increasing the share of sub-65mm cigarettes. Post the implementation of GST, the profit growth trajectory for ITC will improve significantly as GST will remove various distribution inefficiencies. We maintain our Buy recommendation on ITC with a target price of Rs 300 after baking in the negative impact of GST implementation starting from FY18.
MRPL reported its Q1FY17 numbers, which were above our estimates. The topline increased 24.7% QoQ to | 11590.7 crore (our estimate: | 9017.8 crore) mainly due to a change in accounting standards to IND-AS. EBITDA declined 20.6% QoQ to | 1221.2 crore and came in above our estimate of | 677.2 crore. Improvement in GRMs to $10/bbl in Q1FY17 from $8.2/bbl in Q4FY16 and above our estimate of $7.3/bbl in Q1FY17 mainly led to higher than estimated EBITDA. However, a decline in crude oil throughput by 19% due to water shortage led to lower volume of 3.7 MMTPA in Q1FY17 against 4.5 MMTPA in Q4FY16, which led to decline in the EBITDA QoQ. PAT during the quarter declined 46.8% QoQ to | 720.3 crore, above our estimate of | 355.8 crore. QoQ tax expense was higher at 36.6% in Q1FY17 vs. 1.8% QoQ, contributing to the decline in PAT QoQ.
Valuation: MRPL has lower policy leverage and lower gearing on the balance sheet among PSU refineries. With the improvement in operational performance, we expect the standalone company to deliver profits, thus creating value for shareholders in coming years. The performance of ONGC Mangalore Petrochemicals (OMPL) remains crucial in determining the overall company performance. For FY16, OMPL posted revenue of | 4187.6 crore and a loss of | 875.4 crore. However, the management has indicated that its performance would improve in the coming years. A scheme of amalgamation of MRPL with OMPL has been proposed for approval of various regulatory authorities. We value the stock at 6x FY18E EV/EBITDA multiple and OMPL at | 7.6/share to arrive at a target price of | 105.
Syngene has announced the establishment of a dedicated centre for Amgen, Inc. in Bangalore. This centre, called Syngene Amgen Research and Development Centre (SARC), will be Syngene’s fourth such exclusive R&D centre and the first for a biologics company. Syngene already operates dedicated R&D centres for Bristol-Myers Squibb (BMS), Abbott Nutrition (Abbott) and Baxter Inc. SARC will be staffed by a team of more than 100 Syngene scientists, working with Amgen researchers around the world on the discovery and development of innovative medicines.
Also, due to complexity of biologics and customer stickiness in biologic deals, we believe this deal will be more remunerative than the existing dedicated centres, going ahead.We expect sales, EBITDA and PAT to grow at a CAGR of 25.1%, 26.2% and 27.3% to| 2166 crore, | 720 crore and | 457 crore, respectively, over FY16-19E. We have introduced FY19 estimates. Accordingly, we arrive at our new target price of | 570 based on 25x FY19E EPS of | 22.8.
Sadbhav Engineering’s (SEL) topline de-grew 2.7% YoY to | 807.0 crore (our estimate: | 929.4 crore) on account of a sharp decline in revenues from irrigation division (slumped 64% YoY to | 72.3 crore) . The EBITDA margin was flat YoY at 10.8% and was above our estimate of 10.3% on account of lower other expenses (3.3% as a percentage of sales in Q1FY17 vs. 3.8% in Q1FY16). PAT grew 23.4% YoY to | 48.7 crore (our estimate: | 40.7 crore) despite a lower topline on account of lower-than-expected effective tax rate [(0.5% in Q1FY17 vs. our estimate of 20.0%) due to a MAT credit entitlement of | 10.4 crore in Q1FY17]. On a PBT level, at ~| 48.9 crore, it was largely in line with our estimate of | 50.8 crore.
They believe Sadbhav is well poised to capture opportunities across sectors given its healthy orderbook, strong execution capabilities and a robust order pipeline. Consequently, we expect its earnings to grow at 27.5% CAGR in FY16-FY18E. Hence, we maintain our BUY recommendation on the stock with an SOTP based revised TP of | 330. We have valued SEL’s 68% stake in SIPL at | 157/share and EPC business at | 175/share (8x FY18 EV/EBITDA implying 13.6x FY18 EPS).
Sadbhav Engineering Ltd. (SEL) delivered strong 1QFY17 RPAT beat, ~39% ahead of our estimates, aided by Rs 104mn MAT credit entitlement. Despite adjusting for the MAT credit, APAT of Rs 382mn was ~9% above our estimates. The debt on the balance sheet stood at Rs 12.5bn (Rs 1bn increase QoQ) mainly comprising working capital debt with gross standalone D/E at 0.82x.On the back of a strong order pipeline, the management is confident on achieving its FY17E order inflow guidance of Rs 50-70bn, which augurs well for our FY16-18E net revenues/APAT CAGR of 16/41%. Maintain BUY with TP of Rs 324/sh.
Valuation: They maintain BUY stance on SEL with SOTP-based target price of Rs 324/share, value the (1) Standalone EPC business at Rs 211/share (15x one-year forward Mar-18 EPS) and (2) SEL stake in SIPL at 20% holding company discount to current market capitalization at Rs 108/sh.
