Buy Skipper; target of Rs 248: KR Choksey

Skipper Ltd. reported its Q1FY17 results with Net revenue of INR 2,844 Mn, growth of 20.18% YoY basis. The EBITDA stood at INR 407 Mn with margin of 14.3% compared to 14.9% YoY and 13.9% on QoQ basis, a decrease of 61bps YoY. The PAT remained at INR 122.3 Mn against YoY INR 100.3 Mn, with margins at 4.3% as against 4.2% YoY, an increase of 6bps YoY. PAT growth is 22% after adjusting for forex gain of 14.9 mn. Reported PAT increased 36.89%.

Robust order book providing revenue visibility in T&D business; multifold expansion in PVC business on a pan India level providing scalable growth opportunities reinforces our belief in sustainable superior earnings performance ahead (EPS CAGR FY16-18E - 42.03%). We maintain a BUY and TP of INR 248 based on 16x P/E of FY18E EPS and on 9.23x EV/EBITDA FY18E basis, implying 57% upside from current levels. At CMP of INR 158, the company trades at P/E of 10.41x its FY18E EPS of INR 15.18.