Recent Company Updates
A recent conference call hosted by the company addressed key business concerns, providing clarity on several important issues. Management discussed the treatment of goodwill and intangible assets following the acquisitions of Iskraemeco and Sensonics. They also shared progress on receivable management and steps taken to improve related-party transactions, margin reporting, and purchase price allocation.
Financial Clarity and Revisions
The company provided clearer insights into its cash flow reconciliation and working capital metrics. It was also stated that financing arrangements such as bill discounting and factoring are not expected to significantly impact overall profitability. Furthermore, the company indicated that smart metering will decrease as a portion of its portfolio as other sectors like automotive, industrial, electric vehicles (EV), railways, aerospace, and defense continue to grow.
Earnings Estimates and Ratings
Earnings estimates for FY26, FY27, and FY28 have been revised downward by 1.8%, 11.5%, and 7.8% respectively. Despite this, the company maintains a BUY rating, with a DCF-based target price of Rs 5,624, implying a PE of 45x FY28E earnings. Estimated revenue, EBITDA, and PAT CAGR from FY25-28 are 46.4%, 48.4%, and 41.2%, with an EBITDA margin expansion of about 60bps.
Disclaimer
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Key Points:
- Clarifications on goodwill and intangible assets for Iskraemeco and Sensonics acquisitions.
- Progress on receivable management and improvements in related-party transactions.
- Revised earnings estimates for FY26, FY27, and FY28.
- Maintenance of BUY rating with a DCF-based target price of Rs 5,624.