Edelweiss' research report on CARE
The 4.8% YoY jump in CARE’s Q3FY17 revenue belied our estimate by 3.0% due to slowdown in bank loan rating segment led by demonetisation. For 9mFY17, sales grew 7.6%YoY. However, EBITDA and PAT surge of 10% and 68% YoY beat our estimates on better margins and higher other income, respectively.
OutlookWith anticipated uptick in corporate bond market riding government initiatives (dual rating proposal of Commercial Papers (CP), partial credit enhancement (PCE) facility to infra companies) and higher budgetary allocation to infra & agri segment, CARE anticipates pick up in manufacturing activity. Ergo, we forecast 15% sales CAGR coupled with 226bps RoCE expansion to 52.2% over FY17‐19. Maintain ‘BUY’ with TP of INR 1,641 (25x FY19E operating EPS).
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