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Stock recommendation: Genus Power Ltd – BUY – TP Rs.58
Publish date: 2nd August, 2018
Result Update
Genus reported good numbers on the operational front but missed our profit estimates partly due to forex loss of Rs 33 mn. Outlook on EBITDA margins remains positive as material cost pressure is easing off. Further, strong order book makes us comfortable on growth in FY19-20.
Key Highlights
- Strong revenue growth on the back of pick-up in execution.
- EBITDA margin lower due to commodity price pressures and forex loss, but the outlook is improving
- Robust order book of Rs 9.7 bn (net of GST) as compared to Rs 7.0 bn in Q1FY18.
Valuation and Outlook
After the correction in stock price, valuations are reasonable at 17x and 14x FY19E and FY20E respectively. We reiterate BUY with a price target of Rs 58 based on 18x FY20E (prior price target of Rs 71, based on 20x FY20E).
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