Result Update: Greaves Cotton Ltd
¾ Greaves Cotton's (GCL) quarterly profits exceeded our expectations aided by higher gross sales partly offset by lower EBITDA margins.
¾ Near term revenue growth outlook is weak but is seen improving in the medium term as economy gains momentum. Porposed implementation of the BS IV emission norms is another positive factor. We like the strong free cash generation of the company. Further, trigger could be potential for addition of OEMs for engine supply likely by FY18. At 15.2x FY18 earnings, GCL is one of the most attractively valued stocks in our sector. Further, dividend yield is also the highest. We maintain BUY with an unchanged price target of Rs 160 based on DCF.
¾ Risks and Concerns: Upgrade by customers to 4W LCVs may cannibalise 3W LCV volumes which is the stronghold of GCL. We would remain watchful about this emerging threat.
Result Update: Blue Star Ltd
¾ Blue Star's (BSL) profit numbers exceeded our estimates on account of robust growth in room airconditioners (up 34% yoy). However, operating profitability was lower due to execution headwinds in MEP (company provided for some foreseeable costs) and expiry of excise benefits at one its room AC manufacturing plant. Outlook remains positive on account of 1) Enhanced order book 2) Robust growth outlook in room AC and 3) Strong balance sheet.
¾ We have been bullish on the stock and it has outperformed the market in the past three months. We continue to remain positive on the business but valuations are a constraining factor. Thus, maintain our "Accumulate" rating with a revised target price of Rs 500 (Rs 448 earlier).
Result Update: Pidilite Industries Ltd (PIL)
¾ PIL reported Q1FY17 results in line with our estimates; benign VAM prices helped maintaining margins. International business (including Nina and ICA Woodwork) reported meaningful growth.
¾ We believe that at current price, stock is trading expensive implying minimal margin of safety; fully discounting the benefits of lower input prices and potential recovery in B2B and B2C businesses. We value PIL stock at 35x FY18 estimated earnings (earlier 33x FY18 earnings) to take into account peer group valuation and maintain 'Sell' recommendation on company's stock with a revised target price of Rs 670 (Rs 630 earlier).
You received this message because you are subscribed to the Google Groups "LONGTERMINVESTORSRESEARCH" group.
To unsubscribe from this group and stop receiving emails from it, send an email to longterminvestorsresearch+unsubscribe@googlegroups.com.
Visit this group at https://groups.google.com/group/longterminvestorsresearch.
For more options, visit https://groups.google.com/d/optout.
No comments:
Post a Comment