Dear All, Forwarding you the Result Update on MRF for 4QSY2014 with a Buy recommendation and Target Price of `38,282 (12 months). For 4QSY2014, MRF reported an excellent set of numbers. Its top-line grew by 6.8% yoy to `3,361cr, above our estimate of `3,281cr. During the quarter, the company’s raw material cost as a percentage of sales surprised positively, declining by 443bp yoy to 59.5%. Employee expense as a percentage of sales declined by 37bp yoy to 5.4% while other expenses as a percentage of sales increased marginally by 57bp yoy to 17.1%. Aided by lower raw material cost, the EBITDA margin witnessed a 423bp yoy increase to 18.1%. On the back of strong operational performance, the net profit has increased by 72.1% yoy to `317cr. We expect MRF to post a CAGR of 10.0% in net sales over SY2014-16E to `15,981cr, while the EBITDA margin is expected to be at 16.3% in SY2016E. Consequently, the net profit is expected to grow at a CAGR of 22.8% over SY2014-16E to `1,353cr. At the current market price, MRF is trading at a PE of 10.3x its SY2016E earnings and at a P/BV of 2.0x for SY2016E. We have revised our recommendation on the stock to Buy with a target price of `38,282 based on a target P/E of 12.0x for SY2016E.
Posted on: Thu, 27 Nov 2014 08:54:22 +0000
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