Revenues of Punj Lloyd for Q1FY10 registered an increase of 12% on a consolidated basis as against same period last year. This was almost in-line with our expectation of Rs 30 bn on consolidated basis for Q1FY10.
Operating margins for Q1FY10 stood at 9.9% on consolidated basis while on a standalone basis, operating margins stood at 9.5% for the current quarter. This was ahead of our estimates.
Net profit registered an increase of 14% for Q1FY10 as against same period last year.
We maintain our revenue estimates for the company and also introduce FY11 estimates going forward.
We also revise our operating margin assumptions going forward based on excellent operating margin performance in the current quarter.
At current price of Rs 240, stock is trading at 14.1x and 12.5x P/E for FY10 and FY11 respectively.
Certain risks in terms of order inflows for the company have been allayed with key order wins witnessed in the month of July, 2009 thereby increasing the order book steeply in past one month.
Though some risks still exist for the company in term of delays and cost overruns witnessed in few projects, overall environment for the company seems to be improving.
We thus revise our target multiple upwards to factor in key order wins as well as improving margin scenario.
However, we would not give a target multiple at a premium to the sector average due to high leverage as well as expected delays or cost overruns in few of its projects.
We thus continue to maintain ACCUMULATE rating on the stock with a revised price target of Rs 267 on FY10 estimates based on sum-of-the-parts methodology. (Rs 158 earlier)