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NTPC reported Q1FY17 results wherein operationally the performance seems to be better than estimates on the sales and EBIDTA front. The company adopted Ind AS accounting in Q1FY17. Net sales after adjustments of prior period sales, electricity duty and income tax adjustments came in ahead of our estimates of | 18881.5 crore vs. our estimate of | 18353.8 crore.EBITDA at | 5243.2 crore came in above our estimate of | 5208.4 crore mainly on account of lower fuel costs and higher-thanexpected revenues. EBITDA margins came in at 27.8% in Q1FY17.
Valuation: With strong capacity addition targets in FY17E-18E, they expect NTPC’s capacity to reach 52888 MW in FY18E from 45500 MW in FY16. Coupled with this strong focus on renewables, capacity addition in the next five to 10 year, NTPC offers the best play to ride the ongoing solar power boom and recovery in the conventional power sector. Also, it commands relatively a strong balance sheet profile and has enough room to achieve its set milestones, going ahead. We upgrade the target multiple and now value the company at 1.5x its FY18E ABV to arrive at a fair value of | 188.
Indraprastha Gas reported its Q1FY17 results, which were above their estimates. While revenues remained flat YoY at | 899.7 crore (I-direct estimate: | 916.5 crore) due to 11.4% YoY decline in net realisation, the operational performance remained strong with 13.2% YoY increase in total volumes . Gross margins were at | 10.7/scm, above our estimates of | 10.4/scm. Hence, EBITDA margins at 28.9% came in above our estimate of 24.6%. Subsequently, EBITDA came in at | 259.6 crore above our estimate of | 225.6 crore • PAT increased 45.3% YoY during the quarter to | 148 crore, above our estimate of | 126.8 crore.
Outlook and Valuation: IGL provides an opportunity to own a company with a rare mix of volume growth and expanding margins, supported by the subdued natural gas prices and supportive governmental initiatives. Sales volumes have grown at 8.1% CAGR over the last five years and are at 4.1 mmscmd in FY16. We believe IGL’s investment in Maharashtra Natural Gas (MNGL) (| 180.5 crore) is positive, giving it access to industrial gas demand in Pune, without much impact on its balance sheet. At 0.3 mmscmd, MNGL offers high growth potential. Also, investment of | 69 crore in Central UP Gas (CUGL), which is engaged in CGD in the cities of Kanpur and Bareilly, Unnao and Jhansi in Uttar Pradesh present a growth opportunity,value IGL based on the DCF methodology to arrive at a target price of | 870 (WACC – 12%, terminal growth – 4%)
Top takeaways from Q1FY17: Sharp recovery in volume growth to 13% yoy at 4.33mmscmd. CNG grew by a robust 10% yoy while PNG was up a whopping 17%. Volumes were up 6% qoq. Gross margin expanded by 11% (Rs 1/scm) qoq to Rs 10.6/scm on muted 2?3% retail CNG/DPNG price cuts, despite a 20% reduction in domestic gas rates.Opex fell by 1% qoq to Rs 1.6bn due to a decline in other expenditure, which was a positive surprise; we had expected it to rise due to commissioning of new outlets. As a result, EBITDA/scm rose by 25% (Rs 1.3) qoq to Rs 6.5, significantly beating estimates.CUGL/MNGL reported a robust gross PAT of Rs 340mn, up 42% yoy and 21% qoq.
Valuation: They upgrade the stock to Buy with a revised target price of Rs 840 (Rs 650 earlier). This implies a target PE of 16x, which believe is justified due to a sharp recovery in volume/margins and lower WACC in their DCF.
ORL delivered a strong 1QFY17 beat, with revenue 36.2% ahead of estimates. Higher POCM contribution from Esquire and Prisma resulted in outperformance. ORL spent ~Rs 1bn of FSI between the two projects. 1QFY17 Pre-sales of ~0.15mn sqft was driven by Worli project (Three Sixty West) which clocked 55,320sqft in presale and Rs 2.4bn in pre-sale value. Pre-sale was muted in Exquisite, Esquire and Mulund projects. We look forward to stronger 2HFY17E as festive demand pick up along with Goregaon Phase 3 launch (~1.6 mn sqft).
Valuation: They have adopted the DCF methodology to arrive at ORL’s NAV. They value the residential real estate business at Rs 209/sh, hotels at Rs 25/sh, commercial annuity assets at Rs 110/sh, social infrastructure at Rs 9/sh, other assets at Rs 37/sh and net debt at Rs 9/sh to arrive at the total SoTP valuation of Rs 381/sh.Maintain BUY.
Talwalkars Better Value Fitness Ltd is the largest fitness chain in India and Sri Lanka, providing diverse service offerings right from standard gyming and fitness to value added services like Zumba, Reduce, NuForm, Transform, spa, massage, TRX and yoga. With over 1.55 lac membership base, TBVFL has 177 fitness centres with presence across 85 cities.
Higher PBT Aided by Better Operating Margins: On account of higher PLF and lower fuel cost, NTPC's operating margin rose by 667 bps to 27.3%, which led to higher PBT (+65.9% yoy) to Rs30.7bn. Reported PAT increased by 4.1% yoy to Rs23.4bn, as PAT for 1QFY16 (Rs22.43bn) included I-T refund worth Rs8.41bn. Notably, effective tax for 1QFY17 stood at 23.0% vs. negative tax rate of 22.7% in 1QFY16. PBT adjusted for...
Mahindra Lifespace Developers (MLF) is the Real Estate company of Mahindra group. The company benefits from the strong pedigree, brand name, trust and reputation of the Mahindra group. We also believe that over last few years, the company has shaped and executed its business strategy very well, positioning it for strong revenue and earnin..
Wonderla Holidays Ltd reported result for 1QFY17 with a ~32% growth in revenue at Rs.889 mn vs Rs.672 mn for 1QFY16. The company's EBITDA de-grew by ~3% whereas margin shrinked by 1584 bps to 44.1% vs 59.9% of preceding year. PAT de-grew by ~20% to Rs.225 mn from Rs.280 mn YoY. Being one of the fast growing companies in the niche segment, we expect Wonderla to grow faster on account of additional revenue from new parks, growing trend of amusement parks and...
