Navkar Corporation (NCL) reported a good set of numbers for 1QFY2017. The consolidated top-line grew by ~10% yoy while on the operating front, the company reported a margin contraction on account of higher employee and other operating expenses. The net profit grew by ~41% yoy due to lower interest cost and higher other income.
Outlook and Valuation: Angel Broking estimate NCL to post a revenue CAGR of 32.7% and PAT CAGR of 31.3% over FY2016-18E. They have factored in lower utilization levels of 34.7% and 42.6% for FY2017E and FY2018E, respectively. At the current levels, the stock is trading at 16.7x its FY2018E earnings. Historically, NCL has consistently grown at JNPT and increased its utilisation from 68% in FY2012 to 87% in FY2015 by leveraging on its rail advantage during periods when JNPT posted flattish volume growth. Going forward,expect NCL’s utilizations to improve;expect the company to be able to garner a good chunk of business over the next three to four years due to its rail advantage at both JNPT and Vapi. They maintain our Buy recommendation on the stock with a target price of `265.