Navkar Corporation (NCL) reported a subdued set of numbers for 2QFY2017.
The consolidated top-line grew by ~5% yoy; while on the operating front, the
company reported a margin contraction on account of prolonged monsoons that
resulted in higher operational costs. The net profit grew by ~4% yoy due to lower
subdued sales and poor operating performance. We estimate NCL to post a revenue CAGR of ~27% and
PAT CAGR of ~31% over FY2016-18E. At the current level, the stock is trading at
15.2x its FY2018E earnings. Historically, NCL has consistently grown at JNPT and
increased its utilisation from 68% in FY2012 to 87% in FY2015 by leveraging on
its rail advantage during periods when JNPT posted flattish volume growth. Going
forward, we expect NCL’s utilization to improve and the company to garner a
good chunk of business over the next three to four years due to its rail advantage
at both JNPT and Vapi. We maintain our Buy recommendation on the stock with a
target price of Rs265.

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