CRISIL has come out with its report on CMI. The research firm has assigned a fair value of Rs 259 per share. However, retained fundamental grade of 3/5 to the company.
CRISIL's research report on CMI
CMI Ltd’s Q4FY17 consolidated revenue was above CRISIL Research’s expectations. Revenue increased 89.3% y-o-y and 78.4% q-o-q to Rs 1,358 mn, aided by demonetisation-impacted deliveries being executed in Q4. Revenue increased 58.3% to Rs 3,827 mn in FY17 owing to ramp-up of operations in the Baddi facility. EBITDA margin expanded 296 bps y-o-y and 226 bps q-o-q to 16.1% in Q4FY17 following strong growth in operating income. EBITDA margin remained stable y-o-y at 13.9% despite start-up cost incurred for the Baddi plant and sharp increase in employee cost. Consequent to growth in revenue, adjusted PAT increased 53% y-o-y to Rs 235 mn in Q3FY17. Given strong growth opportunities, especially after the acquisition of the Baddi plant, coupled with capable management, we maintain our fundamental grade of 3/5.
We have increased our earnings estimates owing to higher-than-expected earnings of the company in FY17. We value CMI by the discounted cash flow (DCF) method and raise our fair value to Rs 259. At the current market price of Rs 210, our valuation grade is 3/5.
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