McNally Bharat Engineering Subdued performance, Retain BUY:; EMkay

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McNally Bharat Engineering

Subdued performance, Retain BUY

BUY

CMP: Rs 189                                       Target Price: Rs 260

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n     Subdued operational performance with 23% yoy revenue growth to Rs6.9 bn and 130 bps yoy drop in EBITDA margins. But APAT in line at Rs223 mn due to lower finance costs

n     McNally Sayaji disappoints yet again with 56% yoy decline in net profits. But CMT (Germany) delivers with loss of Rs10 mn before taxes – in line

n     Order book stable at Rs43.4 bn on back of 5% yoy decline in order inflows to Rs7.9 bn. Forward order book cover reduces to 1.8X revenues (Vs 2.4X in FY10)

n     Downgrade FY12E earnings by 11% to Rs25.9. Post recent stock price correction, MBE trading attractively at 7.3X FY12E earnings. Retain BUY with revised target of Rs260