Edelweiss research report on CARECARE’s Q1FY17 revenue/EBIDTA/PAT surged 18%/46%/41% YoY surpassing our estimates by 9%/27%/16% following the 43% YoY surge in volume of debt rated led by underlying growth in new volume rated and gain in market share. With anticipated pick up in manufacturing in H2FY17, sales growth is expected to improve, though we would wait for sustainability of sales growth momentum to revise upwards sales growth estimates. However, we have raised our FY17/18E EPS by 5%/4% led by controlled rise in expenses. With healthy outperformance and estimated pick up in manufacturing, we estimate 14% and 19% sales and PAT CAGR over FY16-18 coupled with 492bps RoCE expansion to 51.4%. We maintain ‘BUY’ with a revised TP of INR 1,470 (earlier INR 1,400).
With healthy outperformance and estimated pick up in manufacturing, we estimate
14% and 19% sales and PAT CAGR over FY16-18 coupled with 492bps RoCE expansion to 51.4%. We maintain ‘BUY’ with a revised TP of INR 1,470 (earlier INR 1,400), based on 25x FY18E operating EPS, adjusting for cash. The stock currently trades at 23.1x and 20.0x FY17E and FY18E earnings, respectively.
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