CRISIL lowers Technofab Engineering's fair value to Rs 84
CRISIL Research has come out with its report on Technofab Engineering. The research firm has lowered its fair value to Rs 84 per share from Rs 150 to the company.
December 05, 2013 / 12:25 IST
CRISIL Research's report on Technofab Engineering
Technofab Engineering's (Technofab's) Q2FY14 earnings were below CRISIL Research's expectations. Revenues declined by 23 percent y-o-y to Rs 843 mn as there was no execution in one of the large projects in Mozambique as the requisite funding was withdrawn by the US lending agency. EBITDA margin declined by 530 bps y-o-y and 246 bps q-o-q to 6.3 percent due to lower revenues and execution of low-margin projects. PAT declined by 93.3 percent y-o-y to Rs 5 mn on account of lower EBITDA margin and high interest and depreciation costs. During the quarter, Technofab received orders worth Rs 1.1 bn; the company has L1 status in orders worth Rs 5 bn. Excluding the Mozambique project and couple of other projects which are yet to achieve financial closure, order book as of September 2013 is valued at Rs 8.6 bn (2.1x TTM standalone revenues). Going forward, we expect order inflows to remain under pressure due to weak investment climate and a competitive bidding market. Factoring in potential cancellation of the Mozambique project and weak outlook for new orders, we have lowered our earnings estimates for FY14 and FY15. We retain the fundamental grade of 3/5 but order inflows and timely execution of projects are monitorables.Factoring in potential cancellation of the Mozambique project and weak outlook for new orders, we have lowered our earnings estimates for FY14 and FY15. We continue to value Technofab based on a P/E multiple of 5x. In line with the revision in earnings estimates, we have lowered our fair value to Rs 84 per share from Rs 150.Disclaimer: This report (Report) has been commissioned by the Company/Investor/Exchange and prepared by CRISIL. The report is based on data publicly available or from sources considered reliable by CRISIL (Data). However, CRISIL does not guarantee the accuracy, adequacy or completeness of the Data / Report and is not responsible for any errors or omissions or for the results obtained from the use of Data / Report. Opinions expressed herein are CRISIL's opinions as on the date of this Report. The Data / Report are subject to change without any prior notice. Nothing in this Report constitutes investment, legal, accounting or tax advice or any solicitation, whatsoever. The Report is not a recommendation to buy / sell or hold any securities of the Company. CRISIL especially states that it has no financial liability, whatsoever, to the subscribers / users of this Report. This Report is for the personal information of the authorized recipient only. This Report should not be reproduced or redistributed or communicated directly or indirectly in any form to any other person or published or copied in whole or in part especially outside India, for any purpose.CRISIL Limited. All Rights Reserved. Published under permission from CRISIL"
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