Emkay's research report on DCM ShriramConsolidated revenues at Rs 12.5bn (+6% yoy) came below our est of Rs 12.9bn on the back of lower than est sales in sugar business EBIT margin improved 210bps yoy to 5.3% however were lower than est 7.9% due to lower than est margins in agri business While weakness sugar business led to EBIT loss of Rs 19mn, higher realizations in chloralkali led to 780bps EBIT margin expansion in chemical business. PBT stood at Rs624mn registering a growth of 119% yoy Improvement in sugar realizations and increased sales in agri business if monsoon is normal remain key trigger for the stock. EPS estimate increased by 8% to factor in lower tax rate for FY16. Maintain Buy reco For FY16, we reduce our tax rate assumption to 16% from 22% earlier resulting in 8% increase in our EPS estimate to Rs 17 for FY16 while we leave FY17 estimates unchanged. We continues to maintain Buy reco on the stock with retain our target price of Rs 168 (8x FY17E EPS) For all recommendations, click here Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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