Posts tagged All News
Maruti to seek shareholders’ nod for Gujarat plant (04-09-2015)
GVK wins court fight over Australian coal mine (04-09-2015)
Retain buy on Coal India, target Rs 439 (04-09-2015)
Coal India’s dispatches in August were up 8.9% y-o-y to 40.2 mt, maintaining its healthy high single-digit growth rate. Among the subsidiaries, CCL posted the strongest growth (~20%).
MCL’s growth was ~13% despite disruptions for a few days due to bandh. Dispatches were weak at ECL (down 17%) and WCL (down 2%); both produce high grade coal and are priced close to import prices.
There is a case for price correction in higher-grade (G1 to G4) coal on fall in RB Index, but the overall volumes are just 5% of the total dispatches. YTD dispatches are up 8.2% y-o-y, largely in line with our 9% growth estimate for FY16 (534 mt).
Production growth moderated to 4.8% to 36.2mt in August. Although production growth moderated because of intended destocking, the overburden removal in 1QFY16 was very strong—implying stronger production during rest of the year.
We continue to believe that CIL’s dispatches will rise at a CAGR of 10% to 781m tonne by FY20. In the 1QFY16 analyst meet, the management reiterated its focus on growing production.
CIL’s adjusted Ebitda is likely to grow at a 12.8% CAGR to R38,600 crore by FY20, largely benefiting from operating leverage, transparent pricing for non-power sector and 10% volume CAGR. Based on DCF valuation (WACC of 12.8%), we value the stock at R439— marginally lower than our earlier estimate of R450. The stock is trading at an EV of 6.6x FY17E adjusted Ebitda. Reiterate ‘buy’.
Outperform on BEL amid order flow revival (04-09-2015)
Maintain ‘outperform’ on Bharat Electronics (BEL) on signs of revival in order inflow. We expect earnings to register a CAGR of 10% over FY15-17 and see the pace increasing thereafter as execution picks up.
The stock trades at 18x FY17E earnings, which we believe is attractive given the long-term earnings potential.
Defence spend is seeing an uptick due to government focus on modernizing the defence forces, which is visible in the faster project clearances by the DAC. Given leadership in the defence electronics segment and focus on R&D (8% of FY15 revenues), BEL is well-positioned to capture the growing defence spend. We believe BEL’s order backlog of R21,000 crore (~3x FY15 revenues) provides strong visibility of revenues and earnings.
After a lull in order intake momentum over the past 3-4 years (~R5,000 crore per annum), BEL’s order intake is likely to cross R10,000 crore (up 95% y-o-y) in FY16 as decision-making on defence procurement has been improving. BEL has seen intake of R2,300 crore year-to-date and is L1 in an order worth R7,000 crore (Integrated Air Force Command and control system – IACCS).
The government’s focus on improving and modernising the defence forces has led to faster decision-making on procurement. This is reflected in a pick-up in project approvals by the Defence Acquisition Council.