Navkar Corporation (NCL) reported subdued set of numbers for 3QFY2017. The
consolidated top-line grew by ~4% yoy on the back of lower exports, which was
impacted on account of demonetization. Moreover, on the operating front, the
company reported a margin contraction on account of higher operational costs.
The net profit de-grew by ~27% yoy due to subdued sales and poor operating
performance. We estimate NCL to post a revenue CAGR of ~27% and
PAT CAGR of ~31% over FY2016-18E. At the current level, the stock is trading at
14.9x its FY2018E earnings. Historically, NCL has consistently witnessed growth
at JNPT and increased its utilisation from 68% in FY2012 to 87% in FY2015 by
leveraging on its rail advantage during periods when JNPT posted flattish volume
growth. Going forward, we expect NCL’s utilization to improve and the company
to garner good chunk of business over the next three to four years due to its rail
advantage at both JNPT and Vapi. We maintain our Buy recommendation on the
stock with a target price of Rs265.
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