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CRISIL retains Swan Energy`s fair value to Rs 67

CRISIL Research has come out with it report on Swan Energy. The research firm has maintained a fundamental grade of 3/5 and valuation grade of 4/5 to the company. However has retained a fair value of Rs 67 per share.

December 26, 2014 / 03:59 PM IST
 
 
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CRISIL Research's report on Swan Energy

Swan Energy’s (Swan’s) Q2FY15 standalone results (includes revenues from textile operations and Mumbai-based real estate projects) were broadly in line with CRISIL Research’s expectations. Standalone revenues increased 11% y-o-y to Rs 917 mn driven by the textile segment as the company executed order backlog from the previous quarters. Swan reported minimal revenues from its construction segment as its commercial project in Mumbai is yet to be delivered. EBITDA margin declined 455 bps y-o-y to 10% due to high raw material cost. PAT declined 56% y-o-y to Rs 18 mn largely on account of fall in EBITDA. Owing to procedural issues, offtake agreement for its LNG terminal with a PSU client has been delayed; it is expected to be signed by Q4FY15. The commercial and residential real estate projects (held under subsidiaries) are largely on schedule. We maintain our fundamental grade of 3/5.

Swan’s LNG terminal project (it has 51% equity stake in the project) being set up in Gujarat has a total capacity of 5 MMTPA (mn metric tonnes per annum) and an offtake agreement for 1.5 MMTPA has been signed. The agreement for another 1.5 MMTPA with a PSU client has been delayed on account of procedural issues. Any further delay in signing the agreement could affect the ability to achieve financial closure for the project and is a key monitorable. However, we expect the process to be completed by Q4FY15 and the project to be ready by FY18.

We have maintained our FY15-16 earnings estimates as we expect the LNG terminal and real estate development projects to be executed on schedule. Accordingly, we have retained our fair value at Rs 67 per share. At the current market price of Rs 55, our valuation grade is 4/5.

Disclaimer: This report (Report) has been commissioned by the Company/Investor/Exchange and prepared by CRISIL. The report is based on data publicly available or from sources considered reliable by CRISIL (Data). However, CRISIL does not guarantee the accuracy, adequacy or completeness of the Data / Report and is not responsible for any errors or omissions or for the results obtained from the use of Data / Report. Opinions expressed herein are CRISIL's opinions as on the date of this Report.  The Data / Report are subject to change without any prior notice. Nothing in this Report constitutes investment, legal, accounting or tax advice or any solicitation, whatsoever. The Report is not a recommendation to buy / sell or hold any securities of the Company. CRISIL especially states that it has no financial liability, whatsoever, to the subscribers / users of this Report. This Report is for the personal information of the authorized recipient only. This Report should not be reproduced or redistributed or communicated directly or indirectly in any form to any other person or published or copied in whole or in part especially outside India, for any purpose.

CRISIL Limited. All Rights Reserved. Published under permission from CRISIL"

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first published: Dec 26, 2014 03:59 pm

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