Hold Investment Precision; target of Rs 315: ICICI Direct

ICICI Direct’s research report on Investment Precision

Investment Precision Castings (IPCL) reported a mixed bag Q3FY19 performance amid rising raw material (steel) prices offset by inventory gains, slowdown in demand & tax write back aiding profit growth Net sales in Q3FY19 were at Rs 28.1 crore, down 2.6% YoY, primarily led by a slowdown in volume growth of the automotive segment EBITDA was at Rs 6.2 crore, down 2.5% YoY with corresponding margins at 22.0%. Operating profitability was supported by inventory gains and lower other expenses over the quarter. Selective price hikes initiated by the company also helped maintain margins PAT for the quarter came in at Rs 4.5 crore vs. Rs 2.7 crore in Q3FY18. Higher PAT for the quarter was mainly driven by a tax write-back to the tune of Rs 1.5 crore due to the company’s windmill business.

Outlook

Furthermore, we scale down our earnings as well as valuation multiples and arrive at a target of Rs 315 valuing IPCL at 8.0x EV/EBITDA on FY20E EBITDA of Rs 50.8/share. We revise our recommendation to HOLD.

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First Published on Feb 19, 2019 04:33 pm

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