TRF - Risks to earnings remain, Downgrade to Sell - Emkay

Reco: SELL
CMP: Rs230
Target Price: Rs180

- Standalone operations disappoint with EBITDA loss at Rs111 mn, net loss at Rs209 mn – Led by Projects segment (EBIT loss at Rs211 mn – most likely attributed to cost over-runs)

- Silver lining - Auto components business beats estimates with EBITDA margins at 9.3%, APAT at Rs64 mn. Secures Rs2.7 bn orders; order book improves to Rs10.4 bn

- Gross debt rises to Rs5.35 bn (up 17% over Mar'12). Net DER rises to 3.5X Vs 2.4X in Mar'12– raising risk for equity dilution

- Downgrade stock to Sell citing risks to earnings from standalone operations and high net DER at 3.5X. Revise price target to Rs180 per share (@ 1.3X book value)

Source : Equity Bulls

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