Contents in today's MORNING INSIGHT
¾ Economic News
¾ Corporate News
Analyst Meet Update: GlaxoSmithKline Pharmaceuticals Ltd
We attended the analyst meet of Glaxo Pharma, Glaxo has been facing pressure since last two years since the implementation of NLEM policy in Sep-2013. To revive growth Glaxo has earmarked huge capex for the next three years and is also looking at launching few products from its parent - Glaxo UK's patented product basket in the Indian Pharma Market. Valuations for Glaxo is far higher than the large caps in the pharma space comparatively and is expected to remain so.
Result Update: Engineers India Ltd
¾ EIL reported Q1FY17 results, much higher than our estimate, driven by meaningful growth in the consultancy orders execution and provision write back in LSTK (Lumpsun Turnkey Projects). Order inflows improved significantly in the quarter (highest in past eight quarters) driven by domestic hydrocarbon business. Management shared encouraging outlook for the domestic business and expects significant pickup in order inflows over 9MFY17/FY18. Management revised its FY17 order flows guidance to Rs 35 Bn from Rs 20 Bn earlier.
¾ We reiterate our positive view on EIL and sharply revise our FY18 earnings estimate to factor in 1) improved order flows/execution driven by improved capex spending by domestic oil refineries and 2) improved profitability driven by higher proportion of consultancy orders.
¾ We have maintained in our earlier updates that EIL stock's rerating would track its order book growth. In the improved business environment (shared by the management and other industry players), at PER of 16.9x (FY18 core earnings; adjusted for cash) we believe that EIL stock is trading at attractive valuation.
¾ We expect EIL to significantly outperform the benchmark index in next 6-9 months; change valuation methodology (ascribe PER of 25x on FY18 core earnings, earlier valued on DCF basis) and maintain BUY rating with revised price target of Rs 335 (Rs 210 earlier) on company's stock. We expect company to report cash at Rs 28 Bn in FY18.
Bulk deal
Gainers & losers
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