Contents in today's MORNING INSIGHT
¾ Economic News
¾ Corporate News
Result Update: Allcargo Logistics Ltd (ALL)
¾ Allcargo (ALL) has reported mixed set of numbers for Q2FY17 with sales of Rs 14.1 bn (+1% QoQ), EBIDTA of Rs 1.27 bn (EBIDTA margin of 9%, -50bps QoQ and -60 bps YoY) and PAT of Rs 642 mn (+5% QoQ). Volume was healthy in the key MTO segment at 127,463 TEUs (+5% QoQ /+8.5% YoY) and CFS segment at ~78830 TEUs (+9%QoQ/+2.1%YoY) despite slowdown.
¾ New CFS in Kolkata, value accretive small acquisitions in the MTO segment, measures to reduce cost, O&M of CWC CFS in Mundra and the ongoing buyback adds value. We estimate it to report 5.8% volume CAGR in the MTO segment and 8.5% volume CAGR in the CFS segment over FY16 to FY18E, with inflation adjusted tariffs which will help ALL maintain margins at ~9.3% and report earnings CAGR of 11% over FY16 to FY18E. We also estimate ALL to be the biggest beneficiary of any recovery in trade and GST implementation. We retain estimates and maintain "BUY" on ALL with an unchanged TP of Rs 215 at 16x FY18E earnings.
Result Update: NBCC (India)
NBCC Q2FY17 results were ahead of our estimates at operating level. Net revenue for the quarter was at Rs 12.5 bn (Vs estimates of Rs 13 bn), grew by 17% yoy for the quarter. This was led by 25% yoy growth in PMC business (Vs estimated 30% growth) while real estate business witnessed 56% yoy decline (Vs estimated 63% decline) on slowdown in the sector. EBITDA for the quarter grew by 11% yoy to Rs 721 mn with EBITDA margins at 5.8% and was ahead of our estimates of 4.3% on strong margins in PMC business. NBCC has a robust total order book of Rs 710 bn which gives strong revenue growth visibility for the next 4-5 years. The management does not see any major risk in executing its large size redevelopment project despite slowdown in the real estate sector, considering the location of the project and positive response from large size corporates in the recent times. Besides this, the company is adopting design and built model in several projects and also adopting new technology which would reduce execution time. The management has maintained revenue and PAT growth guidance of 25% CAGR in next 5 years on a conservative basis with major pick-up in execution in redevelopment project seen after FY18. The stock is presently trading at PE multiple of 26x on FY18E EPS of Rs 8.8 and recent correction in the stock price offers upside in the stock. Hence, we upgrade our rating to BUY (Vs Reduce earlier) with revised target price of Rs 256 (Vs Rs 261 earlier).
Bulk deal
Gainers & losers
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