Result Update: Container Corporation of India
¾ Concor Q2FY17 result highlights include improvement in volumes in the Exim segment (primarily imports) at 6.78 lakh TEUs (+4.6% YoY), flattish domestic volumes at 1.04 lakh TEUs, lower operating leverage, higher empty running due to falling exports, lower EBIDTA margin of 16.6% (-450 bps YoY) and PAT of Rs 1.58 bn vs. our expectation of Rs 2.23 bn. We interpret Q2FY17 results and management commentary as lead indictors that the situation would remain similar in medium term as well. Any major positive including the Dedicated Freight corridor is estimated to accrue for the company only post FY19E. Currently, we estimate the volumes to grow at ~5% CAGR over FY16-FY18E with margin ~19.5% (Avg for last 3 years = 22%). The CMP is not factoring the above negatives and the stock is not trading commensurate to its current performance and expected performance, continuing to trade a stretched valuation of 26.9x FY18E earnings. Maintain SELL with a TP of Rs 1180 (from Rs 1365) at 25x FY18E.
Result Update: Elgi Equipment Ltd (EEL)
¾ EEL reported Q2FY17 result in line with our estimates; increased volumes in domestic market and loss curtailment in overseas subsidiaries (scaling down of operations in loss making units in France/ China) supported PAT growth.
¾ We maintain our earning estimates and 'SELL' recommendation on company's stock, in view of downside to our DCF based unchanged target price of Rs 130.
Result Update: Indraprastha Gas Ltd (IGL)
¾ IGL's results are marginally lower than our estimates. In Q2FY17, IGL's PAT has decreased 2.6% qoq to Rs.1.44 bn (+42% yoy) due to higher raw material cost and higher other expenses. IGL's overall sales volume has increased double digit by 12% yoy to 421 mmscm (6.5% qoq). Raw material cost has increased 12% qoq to Rs.5.4 bn (-14% yoy). Gross margin has increased by 2% qoq to Rs.4.3 bn (25% yoy) reflecting significant increase in sales volume.
¾ IGL has declared an interim dividend of Rs.3.5/share and fixed 30th Nov'16 as the record date for the purpose of payment of interim dividend.
¾ We expect meaningful increase in gas sales volume and margins supported by recent cut in domestic gas prices and government's focus on controlling pollution. We expect IGL to book CNG gas volume of ~926 mn Kgs and PNG volume of 393 mmscm in FY17E. Similarly, we model CNG gas volume of ~972 mn Kgs and PNG volume of 409 mmscm in FY18E. We expect an EPS of Rs.42.7 & cash EPS of Rs.56.5 for FY17E and an EPS of Rs.47.3 & cash EPS of Rs.61.4 for FY18E. Based on our estimates, the stock at current market price of Rs.824 is trading at 8.7x EV/EBIDTA and 17.4x P/E on FY18E earnings. We believe that stock is fairly valued at current price and hence we maintain ACCUMULATE (buy on dips) rating on IGL with DCF based revised price target of Rs.866.
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