¾ Revenues of the company for Q1FY17 were lower than our estimates due to lower than expected performance in VSF division
¾ Operating margins improved on yearly basis across all divisions due to lower costs in cement division as well as better pricing in VSF and chemicals.
¾ Net profit performance for the quarter was led by improvement in margins and stood better than our estimates.
¾ At current price of Rs 4539, stock is trading at 14.2x and 10.9x P/E and 5.2x and 3.9x EV/EBITDA on FY17 and FY18 estimates respectively. We suspend coverage on the company as our group company is currently associated with its amalgamation process with Aditya Birla Nuvo.
Result Update: IRB Infrastructure Developers Ltd
¾ Revenues of the company for Q1FY17 were ahead of our estimates due to better than expected EPC revenues on execution ramp up across new projects as well as improvement in traffic volumes.
¾ Margins declined in EPC divisions on yearly basis and consolidated operating margins stood at 52% vs 57.7% during Q1FY17 due to higher proportion of EPC revenues in the overall mix.
¾ Net profit reported an improvement of 9.6% YoY for Q1FY17, beating our estimates due to better than expected revenue growth.
¾ Toll revenues have been witnessing improvement and we expect company to benefit from improving macroeconomic scenario thereby leading to further improvement in toll revenues going forward. It has a healthy order book which should sustain EPC revenue growth going forward. We maintain our estimates and price target of Rs 297 on FY18 estimates. We continue to remain positive on the stock and maintain BUY rating on IRB Infrastructure. Further developments on setting up of investment trust would be keenly watched out for.
Result Update: Thermax Ltd
Thermax reported weak set of numbers as depleting order book has started to weigh on the revenue and profits. Outlook remains subdued as investment pipeline is dry in major user industries like Power, Refineries and Metals. Given the continuing contraction in order book, we forecast the company to report decline in revenues and profits in FY17. Thus, in view of the subdued near-term earnings and premium valuations, we downgrade the stock to "SELL" from "Accumulate" earlier.
Result Update: Great Easter Shipping Company Ltd
¾ Weak global shipping markets (esp. bulk) and lower crude prices which negatively impacts the offshore segment has impacted the performance of the company with sales of Rs 8.1 bn (-15% YoY, -8% QoQ). Improved EBIDTA margins of ~55% (+100 bps YoY) on account of bunker prices, higher other income of Rs 1498 mn (from Rs 803 mn YoY) on forex gain and gain on sale of ships and non-provision for impairment has aided the earnings to Rs 2.88 bn. It is important to note that shipping companies continue to report very volatile earnings QoQ
¾ Shipping and offshore markets are weak and we estimate weak earnings for GESCO over FY16 to FY18E. Historically, GESCO has traded in a range of 0.6 to 1.0x of its NAV. To factor in weakness in the shipping markets, we continue to value of GESCO at 0.67x of its marginally improved NAV of Rs 480 (Q4FY16 NAV was Rs 450). Maintain SELL with a TP of Rs 320.
Result Update: Gujarat Pipavav Port Ltd
Though the management has taken efforts in CY16 to add clients and improve services to its existing clients and superior hinterland connectivity, container volumes have dropped in the quarter to 172,000 TEUs (-3% QoQ and -11% YoY) with sales of Rs 1.68 bn (-9% YoY, +4% QoQ). However, the efforts and weak rupee has led to healthy EBIDTA of Rs 1.01 bn translating into stable margins of 60 % (-160 bps QoQ /+660 bps YoY). Positive was healthy liquid cargo and car volumes, though both segments form a small portion of the overall cargo portfolio of GPPL. Expect container volumes to gain momentum in future quarters. Recommend ACCUMULATE (from BUY) with an increased TP of Rs 180 (from Rs 175).
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