Elecon Engineering Ltd - Multiple risks, Maintain Hold - Emkay

Reco: HOLD
CMP: Rs 53
Target Price: Rs 56

- Dismal performance - Net profit declines 57% yoy attributed to decline in revenues (-7% yoy to Rs2.4 bn), drop in EBITDA margins (-330 bps yoy) and high interest costs (+10% yoy).

- Secures orders worth Rs6.8 bn (47% of FY13E target) - only silver lining. Order book increases 35% qoq to Rs16.3 bn.

- Cut earnings estimates by 8.5% to Rs6.6 for FY13E and by 7.5% to Rs7.5 per share for FY14E - to factor rise in debt and interest charges.

- Retain negative bias on the stock amidst multiple risks to earnings estimates. Maintain HOLD rating with price target of Rs56 per share (@7.5X FY14E earnings).

Source : Equity Bulls

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