McNally Bharat Engineering Company Ltd. share price target

Margin expansion promises encouraging outlook: Despite registering muted revenue growth and slight increase in CoGS, MBEL managed to register an EBITDA margin of 2.5% for FY15. Going forward, on account of healthy revenue growth aided by revival in the economy further supported by stable CoGS & employee costs, we believe EBITDA & EBIT margins to expand by 580 bps each to reach 8.3% & 6.4% respectively by FY17E. Also PAT margin is expected to enter into positive territory resulting in an EPS of Rs. 2.6 in FY17E.