Buy Ambuja Cements, Tech Mahindra: Religare

Religare research report Ambuja Cements

Results in line; maintain estimates – BUY ACEM’s Q2CY15 PAT at Rs 2.3bn came in line with our estimates, down 45% YoY as higher decline in realisations pulled down profitability. EBITDA/t too stood in line at Rs 615 (RCMLe: Rs 623; -Rs 253 QoQ). Despite a higher decline in realisations, ACEM continues to deliver better EBITDA/t than its peer company ACC. We maintain estimates and our Sep’16 TP of Rs 250 set at 12x one-year fwd. EV/ EBITDA. We continue to believe that volume growth remains the key for any meaningful revival from here on. BUY.

Tech Mahindra

Marginal beat on low expectations; retain BUY TechM’s Q1FY16 results were slightly better than estimates with revenue growth of 0.5% QoQ vs. expectations of a 0.5% decline. The weakness was led by the telecom vertical, even as the enterprise business grew 4.4% QoQ organically. EBIT margins were a tad higher at 12.1% (RCMLe: 11.9%). In all, Q1 was a slight beat on already low expectations. While FY16 performance is likely to lag peers, we think better execution can drive margin recovery. Also, valuations at 13.7x FY17 earnings are reasonable. BUY with a target price of Rs 600.

For all recommendations, click here

Read More