Four stocks have been recommended as being worthy of a buy after their Q2FY18 results.
JKIL is gearing up for upcoming biddings, after a pause during 1HFY18. The current order backlog (Rs 86.6bn, 4.5x FY18E rev) is robust, despite no new order wins during 1HFY18. We expect Rs 15-30bn/yr order inflows over FY18-20E. Land acquisition issues in JNPT road projects have been sorted out. JKIL has underperformed peers over the last few quarters and further re-rating is contingent on earnings recovery. We have retained our FY18-20E financial estimates. Maintain BUY with a TP of Rs 385/sh (15x Sep-19E EPS).
The regulator’s drive in sync with our positive thesis: Our positive thesis on MCX stems from the believe that it is a platform on its transformation journey from catering largely to speculative interests of a small set of participants to a deeper ecosystem that eventually acts as a platform for hedgers across commodities. The ideas brought forth during the event re-emphasized those endeavors of the regulator-exchanges combine, and growth in exchange’s liquidity will be an indicator of the progress. We expect FY19 volumes to increase to INR356b per day from FY17 levels of INR235b, driving earnings CAGR of 31% during this period. Our price target of INR1,230 discounts FY19E earnings by 30x. Maintain Buy.
We believe the company is on track to be a decent sized F&F IML packaging player. F&F segment is expected to continue showing good traction and is likely to contribute ~20% to total sales of MPL in FY19. We continue to remain bullish on the long-term structural story of MPL. We have rolled forward our estimates to FY20. We expect volume/sales/EBITDA/PAT to post CAGR of 15%/18%/26%/27%, respectively, over FY17- FY20E. We have valued the stock at 24x September 2019 estimated EPS with a revised target price of Rs426 (Rs381 earlier), up 35% from the CMP
Our valuation of IGL is based on 30xFY20E earnings. Despite FY18E-FY20E earnings CAGR of 15%, we have valued the stock at 30x FY20E earnings because of: 1) Strong probability of higher-than-expected earnings growth following the recent Supreme Court announcement banning the usage of pet coke and furnace oil. 2) Strong balance sheet with net cash position. 3) Strong operational cash flow together with negative working capital which is expected to provide for future capex. 4) Strong monopolistic situation in NCR region ensuring earnings visibility. 5) Government’s focus on growth in natural gas as the preferred mode for meeting energy needs will aid in driving sales. 6) Rising environmental concerns in NCR have added to strong focus of the government on pushing natural gas as the preferred energy provider.