Motilal Oswal's research report on Gujarat PipavavGPPV’s 3QFY16 revenue declined 10% YoY to INR1.7b (lower than the estimate of INR1.8b), driven by lower port volumes—mainly on the bulk front. However, EBIDTA for the quarter was flat YoY at INR1b— in line with our estimate. Better container volume (de-growth muted v/s expectation) and lower bulk (lower gross margin) led to better cost absorption and better EBIDTA margin. EBIDTA margin was 61% v/s estimate of 57.3%. Higher depreciation and tax, as also lower other income, impacted PAT. Reported PAT was INR533, down 40% YoY and lower than the estimate of INR639m. We cut our earnings ~10% for FY16/17 to factor depreciation, other income and tax. We now expect GPPV to report earnings of INR2.3b in FY16 (down 38% YoY) and INR2.7b in FY17 (up 24% YoY). The stock trades at PER of 28x and P/B of 3.3x on FY17E basis. We cut TP to INR198/sh from the earlier INR206/sh. While near-term headwinds persist on demand front, sizable growth options, good quality management and high FCF/dividend possibility are the key positives. 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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