Skipper Ltd. share price target

We maintain our BUY recommendation on the stock.

We maintain our BUY recommendation on the stock.

We recommend a BUY rating on the stock with a target price of Rs 515/share, implying an upside of 10% from the CMP

We maintain our BUY recommendation on the stock

Skipper’s performance in last 1-2 years reflects pick up in domestic and international T&D capex cycle, enhanced EPC capabilities in infra and T&D and strong volume growth in PVC pipes.

We are excited to share our latest Initiating Coverage Report on Skipper Limited, with a BUY recommendation and a target price of Rs 600/share, implying an impressive upside potential of 44% from the CMP.

Leading the T&D revolution

operational performance, c) higher other income and d) exceptional gains of Rs760mn. 2HFY20 5.8%) in Q1FY21 led by sharp gross margin contraction. Overall, EBITDA de-grew by 79% YoY is expected to be better than 1HFY20 with reasonable growth in exports and presence of levers to 90mn in Q1FY21. Lower than expected operating profit led to a net loss of Rs116mn in for margin improvement. However, we believe current valuations already discount most of the Q1FY21 as compared to profit of Rs79mn in Q1FY20. positives of the better product mix, growth at export front and margin improvement and hence...

operational performance, c) higher other income and d) exceptional gains of Rs760mn. 2HFY20 for forex loss, EBITDA margin stood at 10.6% and EBITDA declined by 11% to Rs466mn. is expected to be better than 1HFY20 with reasonable growth in exports and presence of levers Notional forex loss led to PBT loss of Rs20mn. However, Consolidated PAT grew by 58.5% for margin improvement. However, we believe current valuations already discount most of the YoY to Rs 281mn as tax related write backs offset the impact of forex loss....

Poor Performance Continues; Recovery Likely in Next Quarter Skipper continued to deliver a very poor performance in 2QFY19 as well, with its PAT declining by 89% YoY to Rs25mn. Its revenue grew by 1.6% YoY to Rs5.2bn led by 16% de-growth in Polymer division and lower execution in Engineering Products business. Looking ahead, we continue to believe that a sizeable order book, huge imminent opportunity and diversification into PVC business firmly place Skipper on a higher growth trajectory. Further, the stock is available at attractive valuation following a sharp correction during last 6 months. We maintain our BUY recommendation on the stock with a revised Target Price of Rs147 (from Rs214 earlier)....

Skipper's EBITDA declined by 12.9% YoY to Rs450mn, while its EBITDA margin contracted by 355bps YoY to 9.4% led by fall in polymer margin to 1.2% in 1QFY19 (from 9.3% in 1QFY18) owing to execution of fixed-value engineering projects. Fall in Polymer market is attributable to increasing penetration cost in newer markets owing to increased brand building spend and dealer incentives. Skipper's PAT declined by 72% YoY to Rs45mn owing to 62% YoY rise in interest cost to Rs274mn on account of high inventory built-up led by subsequent supply...

Skipper's operational performance was broadly in line with our expectations. Revenue increased by 5% yoy on the back of steady growth in Engineering Products (EP) (+5.9% yoy) and Polymer Products (PP) (+9.3% yoy). While EBITDA margin increased by 42bps yoy to 18.3%, the PAT declined by 15% yoy owing to 76% yoy increase in finance cost. Aggregate order inflows (FY18) in EP stood at Rs21bn, while the order backlog stood at Rs26bn spread across PGCIL (44%), SEB's (44%) and Exports (12%). The company has...

Skipper has delivered a weak performance in 4QFY18 with its reported revenue declining by 2.9% YoY to Rs5.9bn, which however, adjusting for Excise Duty of 4QFY17, grew by 5.0% YoY led by lower execution in Engineering Products business and slower growth in Polymer division. Its EBITDA (+7.5% YoY) and PAT (-15.1 % YoY) stood at Rs1086mn and Rs493mn, respectively. Looking ahead, we continue to believe that a sizeable order book, huge imminent opportunity and diversification into PVC business firmly place Skipper on a higher growth trajectory. Following sharp correction by 30% in last 3 months, the stock is available at attractive level now. We maintain our BUY recommendation on the stock with a revised Target Price of Rs315....

Valuation:Thus, we believe that on account of the above factors, expanding transmission capacity and being of the lowest cost producer of transmission towers, the Company expects 15% growth in the segment. Also, pick up in polymer business along with asset light model wherein, the land is taken on lease and company invests for plant and machinery will give much better asset turnover. Over all capex would be around Rs. 500-600 mn which will be funded largely by internal accruals. Further, with improved working capital cycle has led to healthy Debt/ Equity for the Company Thus, on the valuation front, at CMP Rs.230.2 , the company is trading at a P/E...

Skipper has formed a JV with Metzerplas, a manufacturer of drip Irrigation solutions from Israel, with an eye on a potential Rs. 5,000 mn market opportunity. The company has forayed into manufacturing of solar structures and will carry it...

Maintain a NEUTRAL with TP of Rs 267/share. Skippers sales grew 33/10% YoY/QoQ to Rs 5.7bn vs our expectation of 25% YoY growth, aided by a 38% YoY rise in Engineering Products revenues to Rs 4.86bn. The 33% sales growth came on the back of 23/10% volumes/pricing growth. A 203 bps rise in raw material cost impacted gross margins, which fell to 31.1%. With a 99/40bps fall in other expenses (at 13.9% of sales)/staff costs (at 4.2% of sales), EBITDAM fell 64bps to 13.1% (in line with our estimates). Net profit rose 31% YoY to Rs 292mn, a

Skipper continued to deliver a strong performance in 3QFY18 with its net revenue growing by 39.6% YoY to Rs4.32bn, led by strong volume execution in Engineering Products business and rising commodity prices. Aided by better execution, its EBITDA and PAT grew by 27% YoY and 31.5% YoY to Rs740mn and Rs292mn, respectively. We continue to believe that a sizeable order book, huge imminent opportunity and diversification into PVC business firmly place Skipper on a higher growth trajectory. Rolling over our estimates to FY20E, we maintain our BUY recommendation on the stock with a revised Target Price of Rs340 (from Rs289 earlier). Healthy Revenue Growth on Strong Engineering Volume...