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Q4FY16 Results Update By Amar Ambani Of IIFL



Amar Ambani of IIFL has evaluated the Q4FY16 performance of several stocks and given buy recommendations with price targets




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Strides Shasun (Q4 FY16): Strong end to FY16 – BUY
CMP: ₹1,192, 1-yr Target: ₹1,450, Upside: 21.6%

  • Strides rebounded from a mixed Q3 to end FY16 on a strong note; achieves H2 FY16 guidance numbers on revenues, margin and filings
  • Q4 revenues up ~18% qoq on strong regulated, institutional showing; margins improve ~75bps qoq
  • Expect momentum to continue on regulated markets, institutional front going into FY17E; retain 1- year SOTP target of ₹1,450

Multibagger Stocks Book

Indraprastha Gas (Q4 FY16): Weak quarter but robust outlook – BUY
CMP: ₹568, 1-yr Target: ₹655, Upside: 15.4%

  • Net sales at ₹886cr were lower than estimates owing to weaker than expected PNG volumes and realizations
  • CNG volumes at 210mn kgs were higher by 5% yoy and flat qoq. PNG volumes were at 86 scm a growth of 8.9% yoy and decline of 0.7% on a sequential basis
  • Gross margins/unit increased by 8.9% yoy and flat on qoq basis to ₹12.19/unit. This was lower than our expectations
  • OPM at 22.2% came in lower than our expectations and grew by 306bps yoy
  • Maintain BUY with a price target of ₹655

Glenmark Pharmaceuticals (Q4 FY16): Sequential growth revival – BUY
CMP: ₹869, 1-yr Target: ₹1,100, Upside: 27.1%

  • Strong rebound in growth across all geographies led by India (+22.5% yoy), US (+21.6% yoy) and ROW (+36% yoy)
  • One offs provision related to legal and currency depreciation mar EBIDTA performance; gross margin declines ~200bps qoq
  • Expects Zetia to drive strong traction in US over FY17/18E; co aims to sustain margin profile even beyond Zetia

    • Expect rerating to continue as Zetia launch looms; retain BUY and raise 1-year target to ₹1,100, based on 20x FY18E EPS

Magma Fincorp Ltd. (Q4 FY16): Stress peaking out – BUY
CMP: ₹89, 1-yr Target: ₹120, Upside: 34.8%

  • AUM shrinks marginally, as expected; execution on product mix strategy continues
  • AUM could grow by 15-18% pa over FY16-18
  • NIM improved by 30 bps qoq and 110 bps yoy; operating leverage at play
  • Asset quality was stable; credit cost peaking out

    • Profitability to improve sharply over FY16-18, Maintain BUY

 

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