Technology

For 1QFY2017, sales stood at Rs685cr V/s Rs700cr expected and V/s Rs622cr in
1QFY2016, a yoy growth of 10.2%. The sales growth has been impacted on
back of the pricing cuts implemented by the government. On the operating front,
the OPM came in at 10.2% V/s 16.7% in 1QFY2016 and V/s 17.0% expected.
The company’s OPM was impacted by other expenses, which grew by 40.5%
yoy. Thus, the company posted an Adj. net profit of Rs71cr V/s Rs95cr in
1QFY2016, a yoy de-growth of 25.2%. We maintain our Neutral rating.
Results below expectations: For 1QFY2017, sales stood at Rs685cr V/s Rs700cr
expected and V/s Rs622cr in 1QFY2016, a yoy growth of 10.2%. The sales
growth has been impacted on back of the pricing cuts implemented by the
government. On the operating front, the OPM came in at 10.2% V/s 16.7% in
1QFY2016 and V/s 17.0% expected. The company’s OPM was impacted by
other expenses, which grew by 40.5% yoy. Thus, the company posted an Adj. net
profit of Rs71cr V/s Rs95cr in 1QFY2016, a yoy de-growth of 25.2%..
Outlook and valuation: The company has a strong balance sheet with cash of
~Rs2,000cr, which could be used for future acquisitions or higher dividend pay
outs. On the operational front, we expect the company’s net sales to post a
CAGR of 13.4% to `3,527cr and EPS to register a mere CAGR of 15.9% to Rs59.4
over FY2016–18E. We remain Neutral on the stock.

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