Steeper-than-anticipated challenges at the start of the year
Revenue headwinds to add to margin woes in 1Q
Following our interaction with Tech Mahindra (TECHM) management, we see the start of FY18 marred with challenges as revenue headwinds compound profitability stress. Key highlights:
Possibility of three-step value unlocking
* According to media reports, IHH Healthcare Bhd, Asia’s largest private hospital operator, may announce acquisition of a controlling stake in Fortis Healthcare Ltd (FORH) and SRL Diagnostics. In this note, we have evaluated the possibility of a three-step value unlocking in FORH: 1) IHH/private equity bu
No asset capitalisation in FY18E; upgrade to HOLD on fair valuation
* For Q4FY17, PAT came in at Rs1.7bn which was significantly below our and consensus expectation of Rs3.9bn. This was primarily due to poor hydrology, leading to low rainfall and higher share of Secondary energy sale on YoY basis, resulting in low realisation.
* NHPC didn&rsq
Challenges remain, Trombay Unit-6 PPA at risk
We met Tata Power’s (TPWR) management and visited its Trombay power plant. Key highlights:
* Trombay visit: While Mumbai coal/RLNG-based generation assets are uncompetitive, their PPAs are likely to get extended for a
Steady performance amid challenges; Retain Hold
* Inline performance - Consolidated revenue at Rs11.1bn, up 8.2% yoy; EBITDA up 3.5% yoy to Rs 1.6bn; EBITDA margin at 13.8% (-70bps yoy); APAT at Rs1.1bn, +16% yoy
* Decorative volume growth at ~11%. Have gained marginal market share (0.1-0.2%) in FY17. General and Automotive business reported
Solid institutional player
Moving toward consumer business
Incorporated in 1998 by the Nirmal family, Prabhat Dairy (Prabhat) is a fully integrated milk & dairy products company engaged in the sale of products to institutional and retail customers. The company sells specialty and comanufactured products to its institutio
Recovery getting delayed
* Thermax (TMX) Q4FY17 operational performance was in-line with our expectations. While revenues reported flattish growth, EBIDTAM increased by 280bps YoY to 11.6%. APAT (before share of losses in JV) increased by 2% YoY.
* Order inflows declined by 23% YoY to Rs11.7bn while order backlog declined 15% YoY to Rs 40bn.