Swan Defence and Heavy Industries Ltd. share price target

Reliance Naval & Engineering (RNEL) reported weak Q2FY18 results, which were below our estimates on all fronts Revenues came in | 83.3 crore, down 15.2% YoY. We estimated revenues of | 180 crore for the quarter on the back of revenue booking of patrol boats delivered to the Indian Navy during the quarter EBITDA came in at | 4.4 crore (I-direct estimate: | 16.2 crore). Interest expenses came in at | 167.7 crore, up 25.9% YoY, 11% QoQ as debt increased by | 80.7 crore over the past two quarters. The debt figure is...

Revenues came in | 231.7 crore (including government grants), up 230% YoY. We estimate revenues of | 239.2 crore for the quarter EBITDA came in at | 12.5 crore (I-direct estimate: | 9.6 crore) Interest expenses came in at | 151.7 crore, down 7.8% QoQ. The company reported one-time (exceptional) cost of | 163.2 crore towards right of recompense payable to the lenders on exit from CDR. Subsequently, the overall PAT performance continued to remain stressed at a loss of | 230.4 crore...

Reliance Defence & Engineering (RDEL) reported revenues of | 228.2 crore (I-direct estimate: | 108.9 crore). The company reported a third consecutive quarter of growth, which indicates better execution of its order book, which is currently at ~| 5700 crore On account of revenue recognition of certain orders (percentage completion method), RDEL reported positive EBITDA of | 5.3 crore Interest expenses continue to grow 32% YoY to | 164 crore. Subsequently, overall PAT performance continues to remain stressed...

ICICI Securities Ltd | Retail Equity Research Revenues for Reliance Defence (RDEL) more than doubled YoY (up 25% QoQ) to | 122.7 crore (I-direct estimate: | 93 crore). The company reported a second consecutive quarter of growth, indicating better execution of the existing order book. Revenues in Q2FY17, Q3FY16 were at | 98 crore and | 50.5 crore, respectively Improved execution coupled with contained costs led to positive EBITDA for a third consecutive quarter. EBITDA posted a profit of | 4.4...

The positive EBITDA performance was completely offset by continued higher interest expense which during the quarter grew 13% YoY to | 133.2 crore. Subsequently, PAT for Q1FY17 came in at a loss of...

Reliance Defence’s (RDE, erstwhile Pipavav Defence) Q1FY17 revenues were | 70.3 crore (vs. I-direct estimate: | 120 crore). Revenues in Q4FY16, Q1FY16 were at | 94.7 crore, | 107 crore, respectively. Lower execution in the quarter led to decline in operating expenses resulting in positive EBITDA of | 1.8 crore (I-direct estimate: positive EBITDA of | 1 crore). Lower employee expenses coupled with reversal of costs for revenue recognised earlier, accelerated EBITDA growth. The positive EBITDA performance was completely offset by higher interest expense that during the quarter grew 18%YoY (7% QoQ) to | 132 crore. Subsequently, PAT for Q1FY17 was at a loss of | 135 crore (I-direct estimate: loss of | 160 crore).

RDE’s management expects total naval defence order inflow of ~| 112500 crore for private shipyards in the next 10 years. Technological tieups with a slew of foreign partners SAAB, DCNS, Babcock, etc, position BDE at a vantage point. Near term financials continue to remain subdued. However, the sector opportunity justifies a valuation of 2.5x FY18 P/BV. A slower-than-expected ramp up in the order book results in a downward revision of our target price to | 68. We have a BUY recommendation.

ICICI Securities Ltd | Retail Equity Research Reliance Defence & Engineering's (RDE, erstwhile Pipavav Defence) Q4FY16 revenues were at | 94.7 crore (vs. I-direct estimate: | 67...