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Hold GTL, target of Rs 225: Emkay
Emkay Global Financial Services has maintained its hold rating on GTL with a price target of Rs 225. Revenue growth at 19% YoY was higher than the estimate of 3% YoY, the PAT growth came in line at Rs 383 million.
Emkay Global Financial Services has maintained its hold rating on GTL with a price target of Rs 225 in its April 28, 2009 research report.
"GTL's Q4FY09 performance was in line with estimates. Although revenue growth at 19% YoY was higher than our estimate of 3% YoY, the PAT growth came in line at Rs 383 million. The EBIDTA margins for the quarter declined by 40bps YoY to 14.6% due to rise in admin and employee costs. Net profit for the quarter declined by 22% YoY due to 40% increase in interest expenses due to higher working capital cycle and higher tax rate of 22%. While domestic revenues grew by mere 9%, international revenues grew by 57% YoY."
"We revise our SOTP based target price from Rs 210/ share to Rs 225/ share based on 10x FY10E EPS of Rs 18.2 and value of holding in GTL Infra at Rs 45/ share. Domestic order deferrals and higher working capital cycle remain concerns on the growth and cash flows of the company. Although stock trades above our target price of Rs 225/share, the downside to the stock price could be limited due to upcoming buyback at Rs 260/ share and likely large order wins from BSNL tender. Maintain HOLD," says Emkay Global Financial Services' research report.
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