November 16, 2016 / 12:11 IST
Manufacturing business should fetch better multiple (> 15x PE assigned by us) given a simplified holding structure, efficient control and capital allocation. We expect revenue/EBIDTA/PAT CAGR of 14%/20%/50% over FY16-18 with RoCE of 24%+. Also, the business has always generated strong cash flows which leaves room for dividend payouts.
CMP of TI implies 40% discounts to value of financial services business, assuming our value for manufacturing business at 15x FY18E PE. This is attractive – hence TI remains one of our top midcap BUYs with SoTP-based TP of 753.
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