Centrum's research report on Jain Irrigation
Jain Irrigation Systems Ltd (JISL) for Q3FY17 on a consolidated basis reported decent results. Revenue grew 5% YoY to Rs 1,442 crore, due positive growth across business segments, although the domestic business witnessed an impact post demonetization. EBITDA margins expanded by 238bps to 13.1%. Marginally lower interest expense (down 5%) and tax write back resulted in profit of Rs 6 crore (vs loss of Rs 23 crore in Q3FY16).
Outlook
Post our Q2FY17 result update (17 Nov’16 @ Rs 83), the stock has given a return of 14% and is currently trading at 11x FY19E P/E. Given the current quarter performance and anticipation of further improvement in financials, we expect valuations to sustain. We maintain our Accumulate rating and value the stock at 14x on Sept’18E EPS giving a target price of Rs 105.
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