Buy Subros; target of Rs 365: Khambatta Securities

Khambatta Securities' research report on Subros

2Q FY21 revenues declined by 8% y-o-y, witnessing significant improvement from the 87% y-o-y decline in 1Q FY21. Consequently, 1H FY21 saw a degrowth of 50% y-o-y which is attributable to the COVID-19 outbreak/lockdown and its impact on business operations and demand. While 2Q FY21 EBITDA increased by 21% y-o-y, 1H FY21 EBITDA was down 76% on account of the operating loss recorded in 1Q FY21. PAT bounced back strongly in 1Q FY21 with a y-o-y growth of 34%. Overall for the first half, PAT decline was recorded at 112% y-o-y.

Outlook

Retaining a target P/E multiple of 22.0x, we increase our price target to Rs 365, maintaining a BUY rating with an upside of 38%.