Carborundum Universal Ltd
Industrials-Capital Goods
Valuation and Outlook:
Commissioning of capacities, higher volume off-take, pass-on of cost and congenial GST regime are triggers for the CUMI in the next 12-15 months period which could potentially improve RoCE profile to 20%-22% zone. Considering these triggers at CMP of Rs.296, CUMI is trading at 21.9x FY19E EPS of Rs13.5 and we value CUMI at 25.6x of FY19E EPS for an upwardly revised target price of Rs.346.
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Navin Fluorine International Ltd
Materials-Basic & Diversified Chemicals
Valuation and Outlook:
I have introduced FY19E estimates this quarter, showing CAGR growth of 15.0% from FY17-19E. EBITDA margin pleasantly surprised us as it moved up by 384 bps YoY in FY17. The rise in EBITDA margin was due to focus on high margin business through innovation and better product mix. The company has low debt, high return ratios, paying regular dividend which reflect soundness of financial health of the company. At CMP of Rs.3056, NFIL is trading at 18.4x to FY19E EPS and we value it P/E 20.3x of FY19E EPS which gives upwardly revised target price of Rs.3387.
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Zensar Technologies Ltd
Information Technology - Software & Services
Valuation and Outlook:
I continue to maintain a positive outlook on the company. The company has expanded its operations in the European and African markets wherein the geographical revenue contributions for FY17 grew by 35.7% and 11.6% respectively. With increase in contribution by digital in the business which grew from 30.0% in Q3FY17 to 34.1% in Q4FY17 and expectation of improvement in profit margins going forward, we value the company at 13.6x FY19E EPS and suggest a “HOLD” rating for a revised target price of Rs. 994.
Industrials-Capital Goods
Valuation and Outlook:
Commissioning of capacities, higher volume off-take, pass-on of cost and congenial GST regime are triggers for the CUMI in the next 12-15 months period which could potentially improve RoCE profile to 20%-22% zone. Considering these triggers at CMP of Rs.296, CUMI is trading at 21.9x FY19E EPS of Rs13.5 and we value CUMI at 25.6x of FY19E EPS for an upwardly revised target price of Rs.346.
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Navin Fluorine International Ltd
Materials-Basic & Diversified Chemicals
Valuation and Outlook:
I have introduced FY19E estimates this quarter, showing CAGR growth of 15.0% from FY17-19E. EBITDA margin pleasantly surprised us as it moved up by 384 bps YoY in FY17. The rise in EBITDA margin was due to focus on high margin business through innovation and better product mix. The company has low debt, high return ratios, paying regular dividend which reflect soundness of financial health of the company. At CMP of Rs.3056, NFIL is trading at 18.4x to FY19E EPS and we value it P/E 20.3x of FY19E EPS which gives upwardly revised target price of Rs.3387.
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Zensar Technologies Ltd
Information Technology - Software & Services
Valuation and Outlook:
I continue to maintain a positive outlook on the company. The company has expanded its operations in the European and African markets wherein the geographical revenue contributions for FY17 grew by 35.7% and 11.6% respectively. With increase in contribution by digital in the business which grew from 30.0% in Q3FY17 to 34.1% in Q4FY17 and expectation of improvement in profit margins going forward, we value the company at 13.6x FY19E EPS and suggest a “HOLD” rating for a revised target price of Rs. 994.
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