Accumulate Gravita India; target of Rs 188: Prabhudas Lilladher
Prabhudas Lilladher’ research report on Gravita India
Gravita reported strong set of numbers. Net revenue recorded growth of 45.0% YoY and 18.6% QoQ at Rs 2,247m due to positive impact of GST and commencement of commercial production of PET flakes in Jamaica and fresh capacity addition of lead at Chittoor plant. EBITDA grew 115.5% YoY and 36.5% QoQ to Rs 258m and margins expanded by 375bps YoY and 150bps QoQ to 11.5% in Q2FY18. YoY margin expansion was driven by 110% growth in aluminium revenues thereby accounting for 9% of total revenues (Q1FY17: 5.9%). Simultaneously aluminium margins also expanded from 4.5% in Q2FY17 to 7.2% in Q2FY18.
We have assigned a higher PE multiple to our FY19E EPS estimated thus arriving a revised target price of Rs 188 indicating an upside of 18% from current levels. Maintain Accumulate.
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