Buy

Share price of the Capital first has rose almost 94.33% after Union budget 2016-17 held on 28th Feb 2016, the stock was top performer among financial services sector. Share price of the...

Top takeaways from Q1FY17: Topline at Rs 15.2bn (+33% yoy) was driven by strong 49% yoy growth in EPC revenues. Toll collection grew by 15% yoy – driven by commencement of tolling on NH-8 for Vadodara-Ahmedabad project. Adjusting for new and completed projects, the like-forlike toll collection grew by 9% yoy (6% excl Mumbai-Pune).EPC orderbook is Rs 87bn – 2.6x book-to-sales (Rs 69bn adjusting for O&M contracts @ 2.2x book-to-sales). With the termination of the Zozila tunnel project, the orderbook (to be executed over the next three years) looks rather unimpressive.Phillip Capital maintain BUY with a price target of Rs 320 (unchanged) – BOT Rs 225 + EPC Rs 95.

Escorts today announced the deal to divest majority of it Auto product business for an undisclosed amount. We see this deal as a significant positive for the company not only as it improves the profitability but also provides confidence on the company’s intent of resolving issues in various businesses. The next focus area for the top management is expected to be the turnaround of its construction equipment business. Our estimates partially factor in the said turnaround; however it is far lagging the company’s plans for the segment. While the company benefits from the resolution to its dragging business segments, a turnaround in tractor industry fortunes and a strong growth in the railways business will see substantial gains for the company over the next couple of years (60% net profit CAGR over FY16?18). We increase our EPS estimate for FY18 by 5% to factor in the sale of auto business. Phillip Capital increase their target multiple to 12x from 11x earlier given the profit and return ratio improvement post the deal. We retain our Buy rating on the stock with a revised target price of Rs 390 (Rs 310 earlier).

Key highlights: Consolidated sales (Rs 1.4bn, +14% yoy) were 4% above our estimates. EBITDA margin saw sharp correction to 11.2% (vs. estimated 21.2%) on account of – (1) production disruption in Italy subsidiary for a month period (for implementing efficient technology with target to conserve energy and reduce wastage) and initial marketing spend to launch antioxidant blends in USA. Thus, the EBITDA declined 45% yoy to Rs 157mn. The weak operating performance and higher taxes dragged PAT by 78% yoy to Rs 31mn (estimated Rs 116mn). The weak operating performance was primarily due to quarter specific execution issues at subsidiaries. The standalone financials reported 3% sales growth (to Rs 1.02bn) coupled with 160bps expansion in EBITDA margin (to 17.5%), resulting in 18% yoy growth in profits to Rs 65mn (despite higher tax incidence of 36%). Phillip Capital retain their Buy rating with an unchanged TP of Rs 135 (9x FY18 EV/EBITDA).

Top takeaways from Q1FY17 : PAT of Rs4.2bn (below expectation) due to higher loan loss provision (Rs20bn). Strong pre?provision profit of Rs27bn (+21.2% yoy) driven by NII and treasury gain. Slippage was higher at Rs 60bn and recoveries were strong, as a result GNPA increased to 11.15% (+116bps qoq) and NNPA 5.73% (+67bps qoq). PCR remained flat at 60.2%. Slippage included Rs 12bn from small ticket loan which has emerged due to correction in system. Slippage from corporate segment was Rs13.8bn and balance contributed equally by agri, retail and SME. Slippage from restructured asset was Rs4.8bn. The total stress asset pool (GNPA + Standard restructured + SMA2) increased by Rs7.3bn qoq to Rs681bn (18.8% of loan book).Phillip Capital maintain Buy rating on the stock with PT of Rs200 (unchanged).

Q1FY17 Revenue/EBITDA at Rs 7.77bn/Rs 1.17bn was largely in-line with our estimates of Rs 7.69bn/Rs 1.25mn. Volume grew strongly by 28% YoY (led by capacity expansion at Durg in Mar-15) and realisation improved 3% YoY as prices increased in North/Central markets. Total cost/ton declined 4% YoY, primarily on account of decline in power & fuel cost, freight cost and operating leverage benefits. Going ahead, we largely maintain our FY17E/18E EBITDA estimates. We expect ~70% EBITDA CAGR during FY16- 18E driven by ~11% volumes CAGR & improvement in margin (EBITDA at Rs860/t by FY18E from Rs369/t in FY16). Maintain Buy. Karvy maintain Buy with a revised target price of Rs 517. Our TP is based on 9x FY18E EV/EBITDA on standalone business and Rs 20/share to Udaipur Cement works).

M&Ms 1QFY16 EBITDA at Rs 14.9bn ( 10% YoY) was in line with estimates. The auto segment?s EBIT margin decline of 190bps QoQ was worse than expected, since fiscal incentives lapsed at Haridwar.

Chambal Fertilisers (CHMB) reported revenues of Rs 19bn (-19% YoY) mainly led by lower fertilisers? realisation. EBITDA was at Rs 2.4bn ( 3%) despite taking the adequate hit for the cut in farmgate prices of complex fertilisers. Interest cost was higher at Rs 890 mn ( 21%) owing to higher subsidy receivables. However, it was negated by lower depreciation (-30%, change in asset life) and APAT was Rs 1.4bn.

We initiate coverage on GHCL with a BUY. Our TP is Rs 290, valuing GHCL at an affordable 8x FY18E earnings. It has made a strong comeback after an an overambitious and ill-fated overseas expansion over FY05-07.

Majesco 1Q show was muted primarily due to slowdown in a large account, but a pick-up is expected in 2H. Revenue was up 0.8% QoQ (US$ 32.6mn vs. est US$ 34mn). 12-month order backlog slipped 11.8% QoQ to US$ 63.4mn owing to the absence of large deal wins.